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EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
Dated as of May 29, 1997
between
Nitinol Medical Technologies, Inc. (the "Lender")
and
Image Technologies Corporation (the "Borrower")
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of May 29, 1997, is between
Nitinol Medical Technologies, Inc., a Delaware corporation having a principal
place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the
"Lender") and Image Technologies Corporation, a Delaware corporation having a
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ 02210-
1625 (the "Borrower").
RECITALS
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WHEREAS, the Lender and the Borrower are entering into a Series A Preferred
Stock Purchase Agreement of even date herewith (the "Series A Purchase
Agreement"), pursuant to which the Borrower will issue and sell to the Lender,
and the Lender will purchase from the Borrower, 345,722 shares of the Borrower's
Series A Convertible Preferred Stock, $0.01 par value per share;
WHEREAS, the Borrower requires a working capital line of credit for the
operation of its business following the closing of the transactions contemplated
by the Series A Purchase Agreement; and
WHEREAS, Lender is willing to provide Borrower with such financing
arrangements on the terms and conditions hereafter provided.
NOW, THEREFORE, in consideration of the undertakings set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement:
"Agreement" means this Loan and Security Agreement, as it may be amended or
modified and in effect from time to time.
"Authorized Officer" means either the President, Vice President, Treasurer
or Secretary of the Borrower, acting singly.
"Business Day" means, with respect to any borrowing or payment, a day other
than Saturday or Sunday on which banks are open for business in Boston,
Massachusetts.
"Business Plan" means the business plan of the Borrower, together with the
letter from ▇▇▇ ▇▇▇▇▇▇▇▇ to ▇▇▇ ▇▇▇▇▇ dated February 17, 1997 with attachments
and the spreadsheet labelled "IMAGE F03", all attached hereto as Exhibit F.
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"Code" means the Uniform Commercial Code of the jurisdiction with respect
to which such term is used, as in effect from time to time.
"Collateral" shall have the meaning assigned to such term in Article IV
hereof.
"Default" means an event described in Article VII.
"Effective Date" means the date of this Agreement.
"GAAP" means generally accepted accounting principles consistent with those
from time to time adopted by the Financial Accounting Standards Board, or its
predecessor.
"Guarantee" means the guarantee in substantially the form attached hereto
as Exhibit C(2), executed by ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ in favor of the Lender.
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"Indebtedness" means all liabilities, obligations and indebtedness of any
and every kind and nature, including, without limitation, all liabilities and
all obligations to general creditors (other than trade payables), whether now or
hereafter owing, arising, due or payable, from Borrower to any Person and
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise.
"Intellectual Property Assignments" means those Grants of Security Interest
in substantially the form attached hereto as Exhibits E(1) and E(2), executed
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and delivered by the Borrower in favor of the Lender.
"Lender Guarantees" shall have the meaning assigned to such term in Article
II hereof.
"Loan Documents" means this Agreement, the Guarantee, the Security
Agreement, the Revolving Credit Note, the Intellectual Property Assignments and
all
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other documents, agreements or instruments executed or delivered in connection
with any of the foregoing.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial or other condition of Borrower, (ii)
the Borrower's ability to pay the Obligations in accordance with the terms
thereof or (iii) the Collateral or the Lender's liens on the Collateral or the
priority of such liens.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Revolving Credit Note, all amounts due under the Lender Guarantees and
all other obligations, interest, fees, charges and expenses of the Borrower to
the Lender arising under or in connection with the Loan Documents or the Lender
Guarantees.
"Option Period" means the period during which the Lender may exercise its
option to purchase all of the outstanding capital stock of the Borrower pursuant
to the Stockholders Option Agreement.
"Other Agreements" means all Supplemental Documentation, the Guarantee, the
Lender Guarantees and all agreements, instruments and documents, including,
without limitation, notes, mortgages, deeds of trust, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, subordination agreements, trust
account agreements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of Borrower and delivered to the Lender with
respect to this Agreement.
"Permitted Indebtedness" means the indebtedness or obligations described in
Section 6.5(a) of this Agreement.
"Permitted Liens" means the liens, mortgages, encumbrances, pledges and
other security interests described in clauses (i), (ii) and (iii) of Section
6.5(b) of this Agreement.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Revolving Credit Commitment" means the obligation of Lender to make
Revolving Loans to Borrower in an aggregate amount not to exceed $2,000,000,
less the principle amount of any Loan that has been converted into shares of
Series A Preferred pursuant to Article IX of this Agreement.
"Revolving Credit Loan" means any amount(s) borrowed by Borrower from
Lender pursuant to this Agreement.
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"Revolving Credit Loan Request" means a revolving credit loan request in
substantially the form attached hereto as Exhibit B.
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"Revolving Credit Maturity Date" means May 29, 1999.
"Revolving Credit Payment Date" means the earliest to occur of (i) the
closing of any debt or equity financing by the Borrower resulting in at least
$4,000,000 in gross proceeds to the Borrower, (ii) the merger or consolidation,
or other combination, of the Borrower into or with another corporation or the
sale of all or substantially all of the assets of the Borrower or (iii) thirty
months following the expiration of the Option Period.
"Security Agreement" means the Security Agreement in substantially the form
attached hereto as Exhibit C(1), executed by ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ in favor of the
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Lender.
"Series A Preferred" means the Series A Convertible Preferred Stock, $0.01
par value per share, of the Borrower.
"Stockholders Option Agreement" means the Stockholders Option Agreement of
even date herewith, by and among the Borrower, each of the stockholders named
therein and the Lender.
"Supplemental Documentation" means agreements, instruments, documents,
financing statements, warehouse receipts, bills of lading, notices of assignment
of accounts, schedules of accounts assigned, mortgages and other written matter
necessary or requested by the Lender to perfect and maintain perfected the
Lender's security interest in the Collateral.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Working Capital Purposes" means working capital purposes of the Borrower
consistent with the Business Plan. For purposes of this Agreement, expenditures
which do not exceed the expenditures forecast in the Business Plan by more than
five percent (5%) in any quarter shall be considered working capital purposes of
the Borrower consistent with the Business Plan.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. All other undefined
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terms contained in this Agreement shall, unless the context indicates otherwise,
have the meanings provided for by the Code as in effect in the Commonwealth of
Massachusetts to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole, including the Exhibits and Schedules hereto, as the
same may from time to time be amended, modified or supplemented and not to any
particular section, subsection or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
ARTICLE II
THE LOAN FACILITY
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2.1. Revolving Credit Loan Facility.
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(a) Revolving Credit Loans. The Lender shall, on the terms and
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conditions set forth in this Agreement, make Revolving Credit Loans to the
Borrower at the Borrower's request for the Borrower's Working Capital Purposes
from the date hereof until the Revolving Credit Maturity Date, which Revolving
Credit Loans in an aggregate amount shall not exceed the Revolving Credit
Commitment. The Borrower shall repay the aggregate outstanding principal amount
of each such Revolving Credit Loan on the Revolving Credit Payment Date and all
outstanding interest due on each Revolving Credit Loan and all other amounts
owing under this Agreement or the Loan Documents no later than the Revolving
Credit Payment Date. If the aggregate of all outstanding Revolving Credit Loans
shall at any time exceed the Revolving Credit Commitment, the Lender shall
demand that the Borrower immediately pay such excess to the Lender. The
obligation of the Borrower to repay the principal amount of each Revolving
Credit Loan and any and all interest which accrues thereon shall be evidenced by
a promissory note in the original principal amount of up to the Revolving Credit
Commitment executed and delivered by the Borrower in substantially the form of
Exhibit A hereto (the "Revolving Credit Note").
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(b) Making Revolving Credit Loans. Each Revolving Credit Loan shall
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be made on notice of the principal amount of each Revolving Credit Loan given by
the Borrower to the Lender not later than 12:00 noon on the second day prior to
the date of the proposed Revolving Credit Loan. Such notice shall be made by
submitting to the Lender a duly executed Revolving Credit Loan Request (which
specifies the amount of such Revolving Credit Loan). Each Revolving Credit Loan
shall comply with all of the provisions of this Agreement. If the Lender is
required to make the requested loan or advance pursuant to Section 2.1(a) of
this Agreement, the Lender
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shall advance the requested amount to the Borrower in immediately available
funds to an account designated by the Borrower in the Revolving Credit Loan
Request.
2.2. Interest.
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(a) Interest Rates. Each Revolving Credit Loan, and the amount due
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under any Lender Guarantee, shall accrue interest at a rate per annum equal to
ten percent (10%) (the "Interest Rate"); provided, however, that while a Default
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exists, amounts payable under the Loan Documents shall bear interest (compounded
monthly and payable on demand with respect to overdue amounts) at a rate per
annum equal to thirteen percent (13%) until such amounts are paid in full.
Subject to Section 9.5 of this Agreement, the Borrower shall pay all accrued but
unpaid interest on each Revolving Credit Loan on the Revolving Credit Payment
Date.
(b) Interest Basis. Interest shall be calculated for actual days
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elapsed on the basis of a 360-day year. Interest shall be payable for the day
any Revolving Credit Loan is made but not for the day of any payment on the
amount paid if payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on any Revolving Credit Loan
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
2.3. Method of Payment. All payments of principal, interest and fees
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hereunder shall be made in immediately available funds in United States Dollars
to the Lender at the Lender's address specified pursuant to Section 10.14 of
this Agreement, by noon (local time) on the date when due. Any of the Revolving
Credit Loans outstanding at any time under this Agreement may be prepaid in
whole or in part without penalty.
2.4. Guarantees. The Lender may, in its sole discretion, agree, on the
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terms and conditions set forth in this Agreement, to guarantee obligations of
the Borrower under (i) that certain Lease by and between the Borrower and
Wormwood Realty Trust for the lease of premises located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ and (ii) that certain Equipment Lease by and between the
Borrower and BancBoston Leasing, which guarantees in an aggregate amount shall
not exceed $1.2 million and shall be on terms and conditions acceptable to the
Lender, in its sole discretion (the "Lender Guarantees"). The Borrower shall
repay to the Lender any amounts paid under the Lender Guarantees, together with
all accrued interest thereon, no later than the Revolving Credit Payment Date.
Unless otherwise agreed by the parties, all Lender Guarantees issued by the
Lender hereunder shall terminate on the Revolving Credit Payment Date. The
Borrower acknowledges and agrees that in the event the Lender is required to
make any payments under Lender's guarantee of the Lease described above, the
Borrower shall, at the request of the Lender, assign all of its rights,
including occupancy, under the Lease to the Lender and promptly vacate the
leased
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premises, as provided in that certain agreement of even date herewith by and
between the Lender and the Borrower.
ARTICLE III
CONDITIONS PRECEDENT
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3.1. Conditions to Closing. The agreement of the Lender to make any
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Revolving Credit Loan hereunder is subject to the Borrower having furnished to
the Lender, or caused to be furnished to the Lender (unless otherwise waived by
the Lender), the following, in a form and substance reasonably satisfactory to
the Lender and its counsel: (a) the Revolving Credit Note; (b) the Security
Agreement and the Guarantee, together with written documentation satisfactory to
Lender evidencing that Lender holds a perfected security interest in the
collateral securing such Guarantee; (c) each of the other Loan Documents; (d) a
certificate of the Secretary of the Borrower: (1) certifying that attached
thereto are true and correct copies of documents evidencing all corporate action
taken to authorize this transaction and (2) giving the name, position and
signature specimen of all authorized officers; (e) the written opinion of
counsel to the Borrower, addressed to the Lender in the form attached hereto as
Exhibit D; (f) written documentation satisfactory to Lender evidencing that
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Lender holds a perfected security interest in the Collateral junior only to the
Permitted Liens; and (g) such other documents as Lender or its counsel may
reasonably request.
3.2. Conditions To All Borrowings. Any agreement of the Lender to make
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any Revolving Credit Loan, whether or not after the Effective Date, shall also
be subject to the following conditions precedent:
(a) Borrower shall deliver to the Lender a Revolving Credit Loan
Request, executed by the President of the Borrower, certifying
(i) that each of the representations and warranties of the
Borrower contained in this Agreement and the Loan Documents, or
in any other document or instrument delivered pursuant to this
Agreement, shall be true and correct as of the date as of which
they were made and shall also be true and correct as of the date
the Revolving Credit Loan is made and no Default shall have
occurred and be continuing and (ii) as to the Working Capital
Purpose for which the Revolving Credit Loan shall be used and
that the Borrower is operating in accordance with the Business
Plan;
(b) The Borrower shall have complied with all other requirements
under this Agreement; and
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(c) No third party patent or other intellectual or industrial
property right that includes a claim which covers or allegedly
covers a Licensed Product (as defined in the License Agreement of
even date herewith by and between the Borrower and ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇) and which prevents the Borrower from entering the
market or, once entered, continuing in the market for such
Licensed Products, shall have issued.
ARTICLE IV
GRANT OF SECURITY INTEREST
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4.1 To secure payment and performance of all Obligations, the Borrower
hereby grants to the Lender a security interest in Borrower's now owned or
hereafter acquired:
(a) Inventory, including but not limited to all inventory, supplies, raw
materials, work in process, goods, merchandise, finished inventory and
other tangible personal property held by the Borrower for sale or for
lease, furnished or to be furnished under contracts of service, or
used or consumed in the Borrower's business, goods in transit, any and
all returned or repossessed inventory or merchandise and all documents
of title (whether negotiable or negotiable) representing any of the
foregoing, and all proceeds thereof; and
(b) Accounts, including, but not limited, to all accounts, all rights of
the Borrower to payment for goods sold or leased or for services
rendered, and all accounts receivable of the Borrower; all obligations
owing to the Borrower evidenced by an instrument or chattel paper; all
rights of the Borrower to payment under a contract not yet earned by
performance; all obligations owing to the Borrower of any kind or
nature, including all writings, if any, evidencing the same, including
all instruments, drafts, acceptances and chattel paper; and any and
all proceeds of any of the foregoing. Further included within the term
"Accounts" are all right, title and interest of Borrower in and to the
inventory which gave rise to any Account (including the right of
stoppage in transit), all guaranties of, and security and liens with
respect to, any Account, and all Accounts, Documents and Contract
Rights of Borrower as defined in the Uniform Commercial Code; and
(c) Instruments and Chattel Paper, including all instruments and chattel
paper as defined in the Uniform Commercial Code and all proceeds
thereof; and
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(d) General Intangibles, including, but not limited to, all general
intangibles as defined in the Uniform Commercial Code and all proceeds
thereof, including without limitation, any and all rights of Borrower
to any refund of any tax assessed against Borrower or paid by
Borrower, loss carry-back tax refunds, insurance premium rebates,
unearned premiums, insurance proceeds, choses in action, names, trade
names, goodwill, trade secrets, computer programs, computer records,
data, computer software, customer lists, patents, patent rights,
patent applications, patents pending, patent licenses or assignments,
development ideas and concepts, licenses, permits, franchises,
telephone numbers, literary rights, rights to performance, trademarks,
trademark applications, trademark rights, logos, intellectual
property, copyrights, proprietary or other processes, blueprints,
drawings, designs, diagrams, plans, reports, charts, catalogs,
manuals, research, literature, proposals, cost estimates, routes, and
other reproductions on paper or otherwise, of any and all concepts or
ideas, whether or not related to the business or operations of
Borrower, and including the patents and trademarks listed on
Schedule A hereto; and
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(e) Equipment, including but not limited to all equipment, vehicles,
machinery, tools, furniture, fixtures, trade fixtures and parts.
Further included within the term "Equipment" is all tangible personal
property utilized in the conduct of the Borrower's business (but
excluding any property hereinbefore defined as "Inventory") and all
additions, accessions, substitutions, components, and replacements
thereto, therefor and thereof and all proceeds thereof; and
(f) Other tangible and intangible property, including, without limitation,
all investment property; and
all products and proceeds of all of the above subclauses (a) through
(f), including insurance proceeds (collectively, the "Collateral").
ARTICLE V
REPRESENTATIONS AND WARRANTIES
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The Borrower represents and warrants to the Lender that on the date hereof,
and on the date of each and every Revolving Credit Loan made after the date
hereof:
5.1. Organization; Good Standing. The Borrower is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified and in good standing in
every other jurisdiction where it is doing business.
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5.2. Executive Offices. The location of the Borrower's chief executive
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office, principal place of business, other offices and places of business and of
the Borrower's Accounts and Inventory are set forth on Schedule 5.2 hereto, and
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are the sole offices and places of business of Borrower.
5.3. Corporate Power; Authorization; Enforceable Obligations. The
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execution, delivery and performance by Borrower of the Loan Documents and Other
Agreements, to the extent it is a party thereto, and the creation of all liens
provided for herein and therein: (i) are within Borrower's corporate power;
(ii) have been, and will be, duly authorized by all necessary or proper action;
(iii) are not in contravention of any provision of Borrower's by-laws or
charter; (iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality; (v) will not conflict with or result
in the breach or termination of, constitute a default under, or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound (except for such conflict, breach, termination,
default or acceleration as could not reasonably be expected to have a Material
Adverse Effect or which has been waived or consented to); (vi) will not result
in the creation or imposition of any lien upon any of the property of Borrower
other than those in favor of the Lender, all pursuant to the Loan Documents; and
(vii) do not require the consent or approval of any governmental body, agency,
authority or any other Person except such consents as have been obtained and are
in effect. At or prior to the initial Revolving Credit Loan, each of the Loan
Documents to be delivered at such time shall have been duly executed and
delivered for the benefit of or on behalf of Borrower and each shall then
constitute a legal, valid and binding obligation of Borrower, enforceable
against it in accordance with its terms.
5.4. Liabilities of the Company. The outstanding liabilities of the
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Borrower as of the date of this Agreement are as set forth on Schedule 5.4
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hereto.
5.5. Other Representations and Warranties in Series A Purchase Agreement.
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All of the representations and warranties set forth in Section 3 of the Series A
Purchase Agreement are true and correct as if made on the date hereof.
ARTICLE VI
COVENANTS
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Unless the Lender shall otherwise consent in writing, while any Revolving
Credit Loans or Obligations remain outstanding to the Borrower under this
Agreement or any other agreement, note, document or instrument with the Lender:
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6.1. Reports and Notices. Borrower shall deliver, or cause to be
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delivered, to the Lender:
(a) As soon as practicable, but in any event within two (2)
Business Days after Borrower becomes aware of the existence of any Default or
Unmatured Default, or any development or other information which could
reasonably be expected to have a Material Adverse Effect, telephonic or telecopy
notice specifying the nature of such Default or Unmatured Default or development
or information, including the anticipated effect thereof, which notice shall be
promptly confirmed in writing within three (3) days.
(b) Thirty (30) days prior written notice of any change in the
location of the Borrower's chief executive office, principal place of business,
other offices and places of business and of the Borrower's Accounts and
Inventory.
(c) Such other information respecting the Borrower's business,
financial condition or prospects as the Lender may, from time to time,
reasonably request.
Borrower hereby authorizes the Lender to communicate directly with its
independent certified public accountants and authorizes those accountants to
disclose to the Lender any and all financial statements and other supporting
financial documents and schedules.
6.2. Transactions with Affiliates. Borrower shall not make any payments
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or distributions of any kind to any shareholder of the Borrower or any
affiliates of such shareholder on account of stock ownership. Borrower shall
not enter into any transaction for the purchase, sale or exchange of property or
the rendering of any service to or for any shareholder or director of the
Borrower, or any affiliate of such person or entity, unless such transactions
are in the ordinary course of Borrower's business and are upon fair and
reasonable terms no less favorable to Borrower than Borrower would obtain in a
comparable arm's length transaction with an unaffiliated person.
6.3. Corporate Existence, etc. Borrower shall maintain its corporate
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existence, business and assets, keep its business and assets adequately insured,
maintain its chief executive office at the address set forth on the signature
pages hereto, continue to engage in the same lines of business, and comply in
all material respects with all requirements of law, including ERISA, Federal
Food and Drug Administration laws and regulations and environmental laws.
Borrower will maintain all of its assets and property in good repair and working
order.
6.4. Cooperation with Lender. Borrower shall cooperate with the Lender,
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take such action, execute such documents, and provide such information as the
Lender may
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from time to time reasonably request in order further to effect the transactions
contemplated by and the purposes of the Loan Documents.
6.5. Indebtedness and Liens.
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(a) The Borrower will not create, incur, assume, guarantee or
become liable, contingently or otherwise, with respect to any indebtedness or
obligation, except (i) Indebtedness which is subordinated to the Obligations,
provided the terms of such Indebtedness, including the terms of subordination
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thereof, are satisfactory to the Lender, in its sole discretion, in all
respects; (ii) current liabilities of the Borrower incurred in the ordinary
course of business consistent with past practice and not incurred through the
borrowing of money or the obtaining of credit (except credit on an open account
customarily extended); (iii) Indebtedness in respect of taxes or other
governmental charges being contested in good faith by the appropriate
proceedings; (iv) operating leases entered into by the Borrower in the ordinary
course, provided such operating leases shall not cause a Default herein; and
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(vi) such other Indebtedness described on Schedule 6.5 hereto.
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(b) The Borrower will not 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; (ii)
liens securing taxes or governmental charges not yet due; or (iii) liens
described on Schedule 6.5 hereto.
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6.6. Issuance of Securities. Borrower will not authorize or issue, or
----------------------
enter into any agreement for the authorization or issuance of, any shares of any
class or series of stock of the Borrower or any rights, options or warrants to
subscribe for, purchase or otherwise acquire common stock or other capital stock
of the Borrower or any evidences of indebtedness, shares or other securities
directly or indirectly convertible into or exchangeable or exercisable for
common stock or other capital stock of the Borrower, other than (i) up to an
aggregate of 200,000 shares of common stock issued pursuant to the Borrower's
1997 Stock Option Plan as in effect on the date hereof, (ii) shares of Series A
Preferred (and shares of common stock issuable upon conversion thereof) issued
pursuant to this Agreement and (iii) any warrants issuable to Junewicz & Company
("Junewicz", and all such warrants referred to collectively as the "Junewicz
Warrants") pursuant to that certain engagement letter dated May 23, 1997 between
the Company and Junewicz (and shares of Common Stock issuable upon exercise
thereof).
6.7 Insurance. Borrower agrees to keep all of the Collateral insured
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with coverages in amounts not less than usually carried by one engaged in a like
business (and in any event not less than that required by Lender), naming the
Lender as a loss payee, and payable to the Lender and Borrower, as their
interests may appear. Borrower hereby appoints Lender as attorney-in-fact for
Borrower in obtaining, adjusting, settling and cancelling such insurance and
endorsing any drafts. As further assurance for the payment and performance of
the Obligations, Borrower hereby
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assigns to Lender all sums, including returned or unearned premiums, that may
become payable under any policy of insurance on the Collateral, and Borrower
hereby directs each insurance company issuing any such policy to make payment of
such sums directly to Lender.
6.8. Inspection. Borrower will keep accurate and complete records of the
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Collateral, and Lender or any of its agents shall have the right, upon
reasonable notice, to inspect the Collateral wherever located and to visit
Borrower's place or places of business, at intervals to be determined by Lender
and without Borrower's hindrance or delay, to inspect, audit, check and make
extracts from any copies of books, records, journals, orders, receipts and
correspondence that relate to the Collateral or to the general financial
condition of Borrower. Lender may temporarily remove any of the Borrower's
records for the purpose of having copies made thereof.
6.9. Taxes. Borrower will pay all real and personal property taxes,
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assessments and charges as well as all franchise, income, unemployment, old age
benefit, withholding, sales and other taxes assessed against it, or payable by
it at such times and in such manner as to prevent any penalty from accruing or
any lien or charge from attaching to its property, and will furnish the Lender
upon request, receipts, or other evidence that deposits or payments have been
made.
6.10. Sales. Borrower will not sell or dispose of any of its assets,
-----
including the Collateral, except in the ordinary and usual course of its
business.
6.11. Reimbursement. Borrower will reimburse Lender on demand for any
-------------
sums paid or advanced by Lender to satisfy any tax, lien or security interest or
other encumbrance on the Collateral, to provide insurance on the Collateral or
to pay for the maintenance and preservation of the Collateral; provided however,
-------- -------
that Lender shall not be obligated to make any such payments or deposits. Any
such sums paid or advanced by Lender shall be deemed secured by the Collateral
and constitute part of the Obligations.
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default, without further notice or demand:
7.1. Any representation or warranty made in this Agreement, the Other
Agreements, any Loan Document, the Series A Purchase Agreement, the Stockholders
Option Agreement, or in any written statement, certificate or information
delivered in connection with this Agreement, the Other Agreements, any other
Loan Document, the
13
Series A Purchase Agreement or the Stockholders Option Agreement by or on behalf
of the Borrower, or by any other party thereto (other than the Lender), to the
Lender shall be materially false on the date as of which made.
7.2. Nonpayment of principal or interest under the Revolving Credit Note
when due.
7.3. The breach by the Borrower, or by any other party (other than the
Lender), of any of the covenants contained in this Agreement, the Series A
Purchase Agreement or the Stockholders Option Agreement.
7.4. The occurrence of a default or an event of default under any of the
Loan Documents or under any other agreement, instrument or document with respect
to borrowed money to which the Borrower is a party.
7.5. The Borrower shall (i) have an order for relief entered with respect
to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make
an assignment for the benefit of creditors, (iii) apply for, seek, consent to,
acquiesce in, or have appointed for it or any substantial portion of its
property a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any substantial part of its property, (iv) institute any
proceeding seeking an order for relief under the Federal bankruptcy laws as now
or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this Section 7.5.
7.6. This Agreement shall for any reason fail to create a valid and
perfected security interest in any collateral purported to be covered hereby,
except as permitted by the terms of this Agreement, or this Agreement shall fail
to remain in full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of this Agreement.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration. If any Default described in Sections 7.4 or 7.5
------------
occurs with respect to the Borrower, the Obligations shall immediately become
due and payable without any election, notice or action on the part of the
Lender. If any other Default occurs, the Lender may declare the Obligations to
be due and payable, whereupon the
14
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
8.2. Amendments. The Lender and the Borrower may enter into written
----------
agreements supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of the
Lender or the Borrower hereunder or waiving any Default hereunder. To be
effective, any such amendment or waiver must be in writing and signed by the
Lender and the Borrower.
8.3. Preservation of Rights; No Adverse Impact. No delay or omission of
-----------------------------------------
the Lender to exercise any right under this Agreement or any of the Loan
Documents, shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents, whatsoever shall be valid unless
in writing signed by the Lender, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents, or by law
afforded shall be cumulative and all shall be available to the Lender until the
Obligations have been paid in full.
8.4. Remedies.
--------
(a) Upon the occurrence of a Default, the Lender may proceed to
protect and enforce the Lender's rights by suit in equity, action of law and/or
other appropriate proceeding either for specific performance of any covenant or
condition contained in this Agreement, any Loan Document or in any instrument or
document delivered to the Lender pursuant hereto, or in the exercise of any
rights, remedies or powers granted in this Agreement, any Loan Document and/or
any such instrument or document.
(b) The Lender may enter and take possession of all Collateral
and the premises on which they are located, and in the Lender's sole discretion
operate and use Borrower's equipment, whether or not Collateral hereunder,
complete work in process, without being liable to Borrower on account of any
losses, damage or depreciation that may occur as a result thereof so long as
Lender shall act reasonably and in good faith; and at the Lender's option and
without notice to Borrower (except as specifically herein provided) Lender may
sell, lease, assign and deliver the whole or any part of the Collateral, or any
substitute therefor or any addition thereto, at public or private sale, for
cash, upon credit, or for future delivery, at such prices and upon such terms as
Lender deems advisable, including without limitation, the right to sell or lease
in conjunction with other property, real or personal, and allocate the sale or
lease proceeds among the items of property sold without the necessity of the
Collateral being present at any such sale or lease, or in view of prospective
purchasers thereof.
15
Lender shall give Borrower at least ten (10) days' notice by hand delivery or by
United States first-class mail, postage prepaid (in which event notice shall be
deemed to have been given when so deposited in the mail), to the address
specified herein, of the time and place of any public or private sale or other
disposition unless the Collateral is perishable, threatens to decline speedily
in value, or is the type customarily sold in a recognized market. Upon such
sale, Lender may become the purchaser of the whole or any part of the
Collateral, discharged from all claims and free from any right of redemption.
In case of any such sale by Lender of all or any of said Collateral on credit or
for future delivery, property so sold may be retained by Lender until the
selling price is paid by the purchaser. Lender shall incur no liability in case
of the failure of the purchaser to take up and pay for the property so sold. In
case of any such failure, the said property may again be sold.
(c) The Lender, for a term to commence on the date of the
occurrence of a Default and continuing thereafter until all debts and
Obligations of any kind or character owing from Borrower to Lender are fully
paid and discharged, may enter and use all premises or places of business which
Borrower presently has or may hereafter have and where any of said Collateral
may be located, and the Lender may use all machinery and equipment owned or
leased by Borrower and all goodwill, patent rights, trade names, or logos,
whether or not Collateral hereunder.
(d) Borrower will assemble the Collateral in a single location at
a place to be designated by Lender and make the Collateral at all times secure
and available to Lender.
(e) Following the occurrence of a Default, at Borrower's expense,
the Lender in its own name or in the name of others may communicate with account
debtors in order to verify with them to Lender's satisfaction the existence,
amount and terms of any accounts or contract rights and also notify account
debtors that Collateral has been assigned to Lender and that payments shall be
made directly to Lender. Upon request of Lender, Borrower will so notify such
account debtors and will indicate on all ▇▇▇▇▇▇▇▇ to such account debtors that
their accounts must be paid to Lender. Borrower does hereby appoint Lender and
its agents as Borrower's attorney-in-fact: to collect, compromise, endorse, sell
or otherwise deal with the Collateral or proceeds thereof in its own name or in
the name of the Borrower; to endorse the name of Borrower upon any notes,
checks, drafts, money orders, or other instruments, documents, receipts or
Collateral that may come into its possession and to apply the same in full or
part payment of any amounts owing to Lender; to sign and endorse the name of
Borrower upon any documents, instruments, drafts against account debtors,
assignments, verifications and notices in connection with Accounts, and any
instrument or document relating thereto or to Borrower's rights therein; and to
give written notice to any office and officials of the United States Post Office
to effect such change or changes of address that all mail addressed to Borrower
may be delivered directly to Lender. Borrower hereby grants to its said
attorney-in-fact full power to do any and
16
all things necessary to be done in and about the premises as fully and
effectually as Borrower might or could do, and hereby ratifies all that its
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and is irrevocable for the term of
this Agreement for all transactions hereunder and thereafter as long as Borrower
may be indebted to Lender.
8.5. Application of Proceeds. Any and all proceeds of any Collateral
------------------------
realized or obtained by the Lender upon exercise of its rights and remedies
hereunder, shall be applied to the amounts outstanding under this Agreement or
any other Loan Document, after payment of any and all costs and expenses, fees
and commissions and taxes of such sale, collection or other realization, in
accordance with the following:
(a) Any and all proceeds of any Collateral shall first be applied to the
payment of any and all expenses, charges or other amounts which may
be due and owing under this Agreement or the Loan Documents; and
(b) Any and all proceeds of any Collateral remaining after application
as provided in paragraph (a) above shall first be applied to the
payment of principal, interest or charges outstanding under the
Revolving Credit Loans or under the Loan Documents; and
(c) Any surplus remaining after application as provided in paragraphs
(a) and (b) above shall be paid to the Borrower, or its successors
or assigns, or to whomsoever may be lawfully entitled to receive the
same.
8.6 Remedies Cumulative. All remedies available under this Agreement
-------------------
are cumulative and the exercise of any one remedy shall not preclude the
exercise of any other remedy hereunder.
ARTICLE IX
CONVERSION
----------
9. Optional Conversion. Any Revolving Credit Loan and any amount
-------------------
available under the Revolving Credit Commitment shall be subject to optional
conversion, at the Lender's option, as set forth below (the "Conversion
Rights"):
9.1 Right to Convert. The outstanding principal amount of any Revolving
----------------
Credit Loan shall be convertible, at the option of the Lender, at any time and
from time to time prior to the expiration of the Option Period, into fully paid
and nonassessable shares of Series A Preferred in accordance with the provisions
set forth below. In addition, the Lender may, at its option and at any time and
from time to time prior to the expiration of the Option Period, make additional
Revolving Credit Loans to the Borrower, up to the amount of the Revolving Credit
Commitment, and
17
convert the principal amount of any such additional Revolving Credit Loan into
fully paid and nonassessable shares of Series A Preferred. In the event the
principal amount of the Revolving Credit Loans to be converted equals $2,000,000
(i.e., the initial Revolving Credit Commitment), such Revolving Credit Loans
shall be convertible into 548,090 shares of Series A Preferred (such that after
giving effect to the issuance of such shares of Series A Preferred, the Lender
shall hold, in the aggregate, shares of Common Stock (including all shares of
Series A Preferred held by the Lender (whenever acquired) on an as-converted
basis) representing 43% of the outstanding capital stock of the Borrower). For
the purposes hereof, "outstanding capital stock" shall include the shares of
Common Stock issuable upon exercise of the Junewicz Warrants, but exclude (i)
any shares of Common Stock issuable upon exercise of outstanding stock options
and (ii) any shares reserved for the grant of stock options in the future. In
the event the principal amount of the Revolving Credit Loans to be converted is
less than $2,000,000, the number of shares of Series A Preferred into which such
Revolving Credit Loans shall be convertible shall be equal to one percent of the
outstanding capital stock of the Borrower (after giving effect to any conversion
hereunder) for each $100,000 in principal amount of Revolving Credit Loans so
converted.
9.2 Fractional Shares. No fractional shares of Series A Preferred shall
-----------------
be issued upon conversion of any Revolving Credit Loan, but the Revolving Credit
Note will be marked to reflect a credit for the amount of the Revolving Credit
Loan converted in respect of which any fraction of a share would otherwise be
issuable upon conversion of such Revolving Credit Loan. Such credit shall be
based on the fair market value of the Series A Preferred at the time of
conversion of any Revolving Credit Loan, as determined in good faith by the
Board of Directors.
9.3 Mechanics of Conversion.
-----------------------
(a) In order for the Lender to convert any Revolving Credit Loan
or other amount available under the Revolving Credit Commitment into shares of
Series A Preferred, the Lender shall deliver to the Borrower, during usual
business hours at the Borrower's principal executive offices, written notice of
its election to convert the principal amount of any Revolving Credit Loans, or
the portion thereof specified in such notice, into shares of Series A Preferred.
Such notice shall also state the name or names (and addresses) in which the
Lender wishes the certificate or certificates for shares of Series A Preferred
which shall be issuable on such conversion to be issued. Such conversion shall
be deemed to have been made at the time the notice specified above shall have
been received by the Borrower at its principal executive office (the "Conversion
Date"), and the holder in whose name any certificate or certificates for shares
of Series A Preferred shall be issuable upon such conversion shall be deemed to
have become on the Conversion Date the holder of record of the shares
represented thereby. The Borrower shall, as soon as practicable after the
Conversion Date (and, in any event, within five Business Days), issue and
deliver to the Lender, or to its
18
nominees, a certificate or certificates for the number of shares of Series A
Preferred to which the Lender shall be entitled. If less than the entire
outstanding principal amount of the Revolving Credit Loans is being converted,
the Revolving Credit Note shall promptly be marked to reflect a credit for the
amount of the Revolving Credit Loans so converted.
(b) The Lender shall, at all times prior to the expiration of the
Option Period, reserve and keep available out of its authorized but unissued
stock, for the purpose of effecting the conversion of any Revolving Credit Loan
or amount available under the Revolving Credit Commitment, such number of its
duly authorized shares of Series A Preferred as shall from time to time be
sufficient to effect the conversion of any Revolving Credit Loan or any amount
available under the Revolving Credit Commitment.
(c) The Borrower shall pay any and all issue and other taxes that
may be payable in respect of any issuance or delivery of shares of Series A
Preferred pursuant to this Article IX.
9.4 Mergers and Consolidations. If, prior to the expiration of the
--------------------------
Option Period, the Borrower shall at any time consolidate or merge with, or
otherwise combine with, another corporation (other than a merger or
consolidation in which the Borrower is the surviving corporation), the Lender
will thereafter be entitled to receive, upon the conversion hereof, the
securities or property to which a holder of the number of shares of Series A
Preferred then deliverable upon the conversion of the Revolving Credit Loans
would have been entitled upon such consolidation, merger or combination, and the
Borrower shall take such steps in connection with such consolidation, merger or
combination as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or property thereafter deliverable upon the conversion of any
Revolving Credit Loan or amount available under the Revolving Credit Commitment.
9.5 Accrued Interest. Upon the conversion of any Revolving Credit Loan,
----------------
the Borrower shall not be required to pay any accrued but unpaid interest on the
amount so converted up to the Conversion Date.
9.6 Securities Act of 1933. Upon conversion of any Revolving Credit
----------------------
Loan, the Lender may be required to execute and deliver to the Borrower an
instrument, in form satisfactory to the Borrower, representing that the shares
issuable upon conversion of the Revolving Credit Loan are being acquired for
investment and not with a view to distribution within the meaning of the
Securities Act of 1933, as amended.
19
ARTICLE X
GENERAL PROVISIONS
------------------
10.1. Survival of Representations. All representations and warranties of
---------------------------
the Borrower contained in this Agreement shall survive delivery of the Revolving
Credit Note and the making of the Revolving Credit Loans herein contemplated.
10.2. Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
10.3. Entire Agreement. The Loan Documents embody the entire agreement
----------------
and understanding between the Borrower and the Lender and supersede all prior
agreements and understandings between the Borrower and the Lender relating to
the subject matter thereof.
10.4. No Third-Party Beneficiary. This Agreement shall not be construed
--------------------------
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
10.5. Expenses. All expenses incurred in connection with preparing,
--------
executing and delivering this Agreement and the Loan Documents and all related
instruments and documents executed and delivered in connection herewith, and in
connection with any and all amendments and/or modifications of the Loan
Documents shall be borne by the party incurring such expense. Upon the
occurrence of a Default, and so long as a Default is continuing, Borrower shall
pay to Lender on demand all expenses incurred in connection with the collection
and enforcement of all Obligations under the Loan Documents, including, without
limitation, all reasonable attorneys' fees and expenses, and all costs incurred
by Lender in connection with the collection and enforcement of the Obligations
and in connection with any proceeding commenced by or against the Borrower under
Title 11 of the U.S. Code.
10.6. Indemnity. Borrower hereby indemnifies the Lender and its
---------
respective directors, officers, employees, affiliates and agents (collectively,
"Indemnified Persons") against, and agrees to hold each such Indemnified Person
harmless from, any and all losses, claims, costs, fees, expenses, damages and
liabilities, including claims brought by any officer, director or shareholder or
former officer, director or shareholder of the Borrower, and related expenses
(including reasonable counsel fees and expenses), incurred by such Indemnified
Person arising out of any claim, litigation, investigation or proceeding
(whether or not such Indemnified Person is a party thereto) relating to any
transactions, services or matters that are the subject of, or related to, the
Loan Documents; provided, however, that such indemnity shall not apply to any
-------- -------
such losses, claims, costs, fees, expenses, damages or liabilities determined by
a court of competent
20
jurisdiction to have arisen from the gross negligence or willful misconduct of
such Indemnified Person. All amounts due hereunder shall be payable on demand
and shall constitute Obligations hereunder.
10.7. Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
10.8. CHOICE OF LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS (OTHER THAN
-------------
THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE COMMONWEALTH OF MASSACHUSETTS.
10.9. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
-----------------------
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURT OF MASSACHUSETTS FOR THE PURPOSE OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE LENDER OR ANY
AFFILIATE OF THE LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN THE COMMONWEALTH OF MASSACHUSETTS.
10.10. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN
--------------------
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
21
10.11. Further Assurances. The Borrower, at its own expense, shall do,
------------------
make, execute and deliver all such additional and further acts, deeds,
assurances, documents, instruments and certificates as the Lender may reasonably
require, including, without limitation, (a) executing, delivering and filing
financial statements and continuation statements under the Uniform Commercial
Code and grants of security interests in patents, patent applications,
trademarks, trademark applications and other intellectual property of the
Borrower, (b) obtaining governmental and other third party consents and
approvals, and (c) obtaining waivers from mortgagees and landlords.
10.12. Setoff. In addition to, and without limitation of, any rights of
------
the Lender under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any indebtedness from the Lender to the
Borrower may be offset and applied toward the payment of the Obligations owing
to the Lender, whether or not the Obligations, or any part hereof, shall then be
due.
10.13. Successors and Assigns. The terms and provisions of this Agreement
----------------------
and the Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights or obligations under
the Loan Documents.
10.14. Giving Notice. All notices and other communications provided to
-------------
any party hereto under this Agreement or any other Loan Document shall be in
writing and shall be delivered by hand, sent by fax or overnight courier or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, in each case addressed or delivered to such party at their
addresses set forth in the first paragraph of this Agreement, unless otherwise
designated in writing to the other parties hereto.
Notices provided in accordance with this Section 10.14 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 reorganized overnight
courier service and (4) three Business Days after deposit in the U.S. mail,
first class certified or registered, postage prepaid.
10.15. Change of Address. The Borrower and the Lender may each change the
-----------------
address for service of notice upon it by a notice in writing to the other
parties hereto.
10.16. Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and the Lender.
22
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement as of the date first above written.
Borrower: IMAGE TECHNOLOGIES
CORPORATION
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Lender: NITINOL MEDICAL
TECHNOLOGIES, INC.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
23
Schedules
---------
Schedule A - Patents, Trademarks and Copyrights
Schedule 5.2 - Executive Offices
Schedule 5.4 - Outstanding Liabilities
Schedule 6.5 - Permitted Liens and Indebtedness
Exhibits
--------
Exhibit A - Revolving Credit Note
Exhibit B - Revolving Credit Loan Request
Exhibit C(1) - Security Agreement
Exhibit C(2) - Guarantee
Exhibit D - Form of Opinion
Exhibit E(1) - Grant of Security Interest (Trademarks)
Exhibit E(2) - Grant of Security Interest (Patents)
Exhibit F - Business Plan of Borrower
24
SCHEDULE A
----------
(A) Trademark Applications:
-----------------------
(i) TroCam: 75237888 - February 7, 1997
(ii) GynaCam: 75238114 - February 7, 1997
(iii) TroView: 75238108 - February 7, 1997
(B) Patent Applications:
-------------------
(i) Surgical/Diagnostic Imaging Device. The application claims the
benefit of Provisional Application No. 60/003,802 filed September
15, 1995.
(ii) Video Gynecological Examination Apparatus. This application claims
the benefit of prior filed copending U.S. Provisional Application
No. 60/011,255 filed February 7, 1996.
(iii) System For Single-Puncture Endoscopic Surgery with Serial No.
60/011, 269 filed February 5, 1996.
(iv) Lens Application, Serial No. (not yet assigned) and mailed May 24,
1996.
(v) Device for Coupling a CCD Camera To An Endoscope, Serial No. (not
yet assigned) and mailed May 7, 1997.
There are no service marks or copyright registrations.
SCHEDULE 5.2
------------
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
SCHEDULE 5.4
------------
The outstanding liabilities of the Borrower are set forth on the attached
Financial Statements of the Borrower previously delivered to the Borrower;
together with a total of $102, 808.00 due at the closing to individual lenders,
including $15,000.00 due to ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇.
SCHEDULE 6.5
------------
NONE, except for $102,808.00 due at the closing to individual lenders,
including $15,000.00 due to ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇.
REVOLVING CREDIT NOTE
$2,000,000.00 May 29, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, on the Revolving Credit Payment Date (as defined in the
Loan and Security Agreement referred to below), Image Technologies Corporation,
a Delaware corporation (the "Borrower"), promises to pay to Nitinol Medical
Technologies, Inc., a Delaware corporation (the "Lender"), or order, at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, or such other place as Lender or any
holder hereof may from time to time designate, the principal sum of Two Million
Dollars ($2,000,000.00), or, if less, the aggregate unpaid principal amount of
all Revolving Credit Loans (as defined in the Loan and Security Agreement
referred to below), in United States Dollars and in immediately available funds
as provided in the Loan and Security Agreement of even date herewith between the
Borrower and Lender (the "Loan and Security Agreement"), together with interest
on the unpaid principal amount hereof from time to time outstanding at the rate
set forth in the Loan and Security Agreement and any other Obligations under the
Loan and Security Agreement. Interest shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed.
This Note is issued pursuant to, and is entitled to the benefits of, the
Loan and Security Agreement, as it may be amended from time to time. Reference
is hereby made thereto for a statement of the terms and conditions under which
this Note may be prepaid or its maturity date accelerated. This Note is secured
pursuant to the Loan and Security Agreement and a Guarantee, each of even date
herewith, as more specifically described in the Loan and Security Agreement, and
reference is made thereto for a statement of the terms and provisions thereof.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Loan and Security Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of the Revolving Credit Loan, the date and amount of each
principal payment hereunder and the date of conversion of any principal amount
of any Revolving Credit Loan into shares of Series A Preferred.
The outstanding principal amount of any Revolving Credit Loan shall be
convertible, at the option of the Lender, at any time and from time to time
prior to the expiration of the Option Period, into fully paid and nonassessable
shares of Series A Preferred in accordance with the provisions set forth in the
Loan and Security Agreement. In addition, the Lender may, at its option and at
any time and from time to time prior to the expiration of the Option Period,
make additional Revolving Credit Loans to the Lender, up to the amount of the
Revolving Credit Commitment, and convert the principal amount of any such
additional Revolving Credit Loan into fully paid and nonassessable shares of
Series A Preferred.
If any payment of principal or interest is not made when due hereunder, or
if any other event of Default shall occur for any reason, or if the Loan and
Security Agreement shall be terminated or not renewed for any reason whatsoever,
then and in any such event, in addition to all rights and remedies of Lender
under the Loan and Security Agreement or any Loan Document, applicable law or
otherwise, all such rights and remedies being cumulative and enforceable
alternatively, successively and concurrently, Lender may, at its option, declare
any and all of the Borrower's Obligations to be due and payable, whereupon the
then unpaid balance thereof, together with all interest accrued thereon or
expenses incurred in connection therewith shall forthwith become due and
payable, together with all interest accruing thereafter at the rate of interest
upon Default until the indebtedness evidenced by this Note is
paid in full, plus all costs and expenses of collection hereof, including,
without limitation, reasonable attorneys' fees and expenses.
Borrower shall pay all Lender's costs and expenses (including, without
limitation, all reasonable attorneys' fees and expenses) incurred in connection
with the enforcement of or preservation of rights under this Revolving Credit
Note on the terms provided in the Loan and Security Agreement.
No delay or omission on the part of the Lender in exercising any right
hereunder shall operate as a waiver of such right or of any other right of
Lender, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every indorser or guarantor of this Revolving Credit Note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of collateral, and to the addition or release of any other party or
person primarily or secondarily liable.
None of the terms or provisions of this Revolving Credit Note may be
excluded, modified, or amended except by a written instrument duly executed on
behalf of the holder expressly referring hereto and setting forth the provision
so excluded, modified or amended. This Revolving Credit Note shall be binding
upon the successors and assigns of the Borrower and inure to the benefit of
Lender and its successors, endorsees and assigns. If any term or provision of
this Revolving Credit Note shall be held to be invalid or unenforceable, in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall only effect such term or provision, and shall not effect such term or
provision in any other jurisdiction or any other term or provision of this
Revolving Credit Note.
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OF
THE OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER AT THE ADDRESS PROVIDED BELOW THE BORROWER'S
EXECUTION HEREOF. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
Borrower hereby waives its right to a jury trial in any judicial proceeding
involving, directly or indirectly, any matter (whether sounding in tort,
contract or otherwise) in any way arising out of, related to, or connected with
this Revolving Credit Note, the Loan and Security Agreement or any Loan Document
or the relationship established thereunder.
-2-
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts (without giving effect to principles of conflicts
or choice of laws) and this Revolving Credit Note shall be deemed to be made
under seal.
ATTEST: IMAGE TECHNOLOGIES CORPORATION
By:
------------------------------ ------------------------------
Assistant Secretary Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
-3-
SCHEDULE OF LOAN AND PAYMENTS OF
PRINCIPAL TO REVOLVING CREDIT NOTE OF IMAGE TECHNOLOGIES CORPORATION
DATED: May 28, 1997
-------------------------------------------------------------------------------
Principal
Amount
Converted into
Principal Maturity Principal Series A
Amount of of Interest Amount Preferred Unpaid
Date Loan Period Paid Stock Balance
---- ---- ------ ---- ----- -------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-4-
Exhibit B
---------
IMAGE TECHNOLOGIES CORPORATION
[Letterhead]
_____________________, 1997
Nitinol Medical Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer
Re: Revolving Credit Loan Request
-----------------------------
Ladies and Gentlemen:
The undersigned, Image Technologies Corporation, a Delaware corporation
(the "Borrower") hereby requests that you make a Revolving Credit Loan pursuant
to the terms and conditions set forth in the Loan and Security Agreement dated
as of May 28, 1997 (the "Loan and Security Agreement"), by and between the
Borrower and Nitinol Medical Technologies, Inc., a Delaware corporation (the
"Lender"), as the same may be amended and in effect from time to time, as set
forth below. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Loan and Security Agreement.
The Borrower hereby represents, warrants and certifies to you that (a)
the representations and warranties of the Borrower contained in the Loan and
Security Agreement and the other Loan Documents (as defined therein) or
otherwise made by the Borrower in connection with the transactions contemplated
thereby were true and correct in all respects when made and are true and correct
in all respects on and as of the date hereof with the same effect as if made
herein (except to the extent of changes resulting from transactions contemplated
or permitted by the Loan and Security Agreement and the other Loan Documents and
changes occurring in the ordinary course of business and except to the extent
that such representations and warranties relate expressly to an earlier date),
(b) the Borrower has performed and complied in all respects with all of the
terms and conditions contained in the Loan and Security Agreement required to be
performed or complied with by the Borrower prior to or at the time of the
borrowing requested herein, (c) at and as of the date hereof, no Default or
event of Default or condition which would, with the lapse of time or the
Nitinol Medical Technologies, Inc.
Page 2
giving of notice, or both, result in an Default or event of Default exists
and/or shall result from the consummation of the borrowing requested herein, (d)
the aggregate amount of Revolving Credit Loans (including the proposed Revolving
Credit Loan), does not exceed the Revolving Credit Commitment, (e) the Working
Capital Purpose for which the Revolving Credit Loan shall be used is __________
_______________________________________________________________________________
and the Borrower is operating in accordance with the Business Plan and (f) no
third party patent or other intellectual or industrial property right that
includes a claim which covers or allegedly covers a Licensed Product and which
prevents the Borrower from entering the market or, once entered, continuing in
the market for such Licensed Products has issued.
The Borrower requests, pursuant to (S) 2.1 of the Loan and Security
Agreement, that the Lender make a Revolving Credit Loan in the principal amount
of $___________ on _________________, 1997.
You are hereby directed to transfer the proceeds of the requested
Revolving Credit Loan to Borrower in accordance with the following instructions:
[Insert Instructions]
Very truly yours,
IMAGE TECHNOLOGIES CORPORATION
By:
----------------------------
Title: President
SECURITY AGREEMENT
------------------
DATED as of May 29, 1997
between
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
and
NITINOL MEDICAL TECHNOLOGIES, INC.
TABLE OF CONTENTS
-----------------
1. Definitions....................................................... 1
2. Grant of Security Interest........................................ 1
2.1. Collateral Granted.......................................... 1
3. Title to Collateral, etc.......................................... 2
4. Continuous Perfection............................................. 2
5. No Liens.......................................................... 2
6. No Transfers...................................................... 2
7. Maintenance of Collateral; Compliance with Law.................... 2
8. Collateral Protection Expenses; Preservation of Collateral........ 3
8.1. Expenses Incurred by NMT.................................... 3
8.2. NMT's Obligations and Duties................................ 3
9. Further Assurances................................................ 3
10. Power of Attorney................................................. 4
10.1. Appointment and Powers of NMT.............................. 4
10.2. Ratification by Guarantor.................................. 5
10.3. No Duty on NMT............................................. 5
11. Remedies.......................................................... 5
12. No Waiver, etc.................................................... 5
13. Marshalling....................................................... 6
14. Proceeds of Dispositions; Expenses................................ 6
15. Governing Law; Consent to Jurisdiction............................ 7
16. Waiver of Jury Trial.............................................. 7
17. Miscellaneous..................................................... 7
Exhibit C-1
-----------
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of May 29, 1997, between ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
an individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Guarantor"), and NITINOL MEDICAL TECHNOLOGIES, INC., a Delaware corporation
having a principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "NMT").
WHEREAS, Image Technologies Corporation, a Delaware corporation having a
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter "ITC") has entered into a Loan and Security Agreement dated as of
May 29, 1997 (as amended and in effect from time to time, the "Loan and Security
Agreement"), with NMT, pursuant to which NMT, subject to the terms and
conditions contained therein, is to provide a line of credit on behalf of ITC;
and
WHEREAS, it is a condition precedent to NMT's issuing such line of credit
under the Loan and Security Agreement that the Guarantor execute and deliver to
NMT a security agreement in substantially the form hereof; and
WHEREAS, the Guarantor wishes to grant security interests in favor of NMT
as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions
-----------
shall have the respective meanings provided therefor in the Loan and Security
Agreement.
2. Grant of Security Interest.
--------------------------
2.1. Collateral Granted. The Guarantor hereby grants to NMT, to
------------------
secure the payment and performance in full of all of the Obligations, a
security interest in and so pledges and assigns to NMT the following
properties, assets and rights of the Guarantor, wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof (all of the same being hereinafter called the "Collateral"):
All patents, patent applications, trademarks, trademark
applications (including, without limitation, those listed in Exhibit
-------
A, hereto and made part hereof), license fees, income, royalties,
-
trade names, copyrights, copyright applications, rights to ▇▇▇ and
recover for
past infringement of patents, present and future trademarks and
copyrights, license fees, computer programs, computer software,
engineering drawings, service marks, customer lists, goodwill, and
all licenses, permits, agreements of any kind or nature pursuant to
which the Guarantor possesses, uses or has authority to possess or
use property (whether tangible or intangible) of others or others
possess, use or have authority to possess or use property (whether
tangible or intangible) of the Guarantor, and all recorded data of
any kind or nature, regardless of the medium of recording including,
without limitation, all software, writings, plans, specifications and
schematics, and all of Guarantor's rights to any of the foregoing
throughout the world.
3. Title to Collateral, etc. The Guarantor is the owner of the
------------------------
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Loan and Security Agreement.
4. Continuous Perfection. The Guarantor's place of residence or, if more
---------------------
than one, primary residence is indicated in this Agreement. The Guarantor will
not change the same in any manner, without providing at least 30 days prior
written notice to NMT.
5. No Liens. Except for the security interest herein granted and liens
--------
permitted by the Loan and Security Agreement, the Guarantor shall be the owner
of the Collateral free from any lien, security interest or other encumbrance,
and the Guarantor shall defend the same against all claims and demands of all
persons at any time claiming the same or any interests therein adverse to NMT.
The Guarantor shall not pledge, mortgage or create, or suffer to exist a
security interest in the Collateral in favor of any person other than NMT except
for liens permitted by the Loan and Security Agreement.
6. No Transfers. The Guarantor will not sell or offer to sell or
------------
otherwise transfer the Collateral or any interest therein.
7. Maintenance of Collateral; Compliance with Law. The Guarantor will
----------------------------------------------
keep the Collateral in good order and will not use the same in violation of law
or any policy of insurance thereon. NMT, or its designee, may inspect the
Collateral at any reasonable time, wherever located. The Guarantor will pay
promptly when due all taxes, assessments, governmental charges and levies upon
the Collateral or incurred in connection with the use or operation or
maintenance of such Collateral or incurred in connection with this Agreement,
unless otherwise specified in the Loan and Security Agreement.
-2-
8. Collateral Protection Expenses; Preservation of Collateral.
----------------------------------------------------------
8.1. Expenses Incurred by NMT. In its discretion, NMT may discharge
------------------------
taxes and other encumbrances at any time levied or placed on any of the
Collateral and pay any necessary filing fees. NMT may (i) pay all renewal
fees and other fees and costs associated with maintaining the patents and
marks and with the processing of the patents and marks, (ii) at Guarantor's
sole cost, expense, and risk, pursue the prompt, diligent, processing of
each Application for Registration which is the subject of the foregoing
assignment and not abandon or delay any such efforts, and (iii) at
Guarantor's sole cost, expense, and risk, take any and all action which may
be necessary or desirable to protect the patents and marks, including,
without limitation, the prosecution and defense of infringement actions.
The Guarantor agrees to reimburse NMT on demand for any and all
expenditures so made. NMT shall have no obligation to the Guarantor to make
any such expenditures, nor shall the making thereof relieve the Guarantor
of any default, unless otherwise specified in the Loan and Security
Agreement.
8.2. NMT's Obligations and Duties. Anything herein to the contrary
----------------------------
notwithstanding, the Guarantor shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Guarantor thereunder. NMT shall not have any obligation or liability under
any such contract or agreement by reason of or arising out of this
Agreement or the receipt by NMT of any payment relating to any of the
Collateral, nor shall NMT be obligated in any manner to perform any of the
obligations of the Guarantor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by NMT in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to NMT
or to which NMT may be entitled at any time or times.
9. Further Assurances. The Guarantor, at its own expense, shall do,
------------------
make, execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as NMT may require more completely to vest in and
assure to NMT its rights hereunder or in any of the Collateral, including,
without limitation, (i) executing, delivering and, where appropriate, filing
financing statements and continuation statements under the Uniform Commercial
Code, (ii) executing, delivering and, where appropriate filing security
interests with the Patent and Trademark Office or the Copyright Office (iii)
obtaining governmental and other third party consents and approvals, (iv)
obtaining waivers from mortgagees and landlords and (v) taking all actions
required by Sections 8-313 and 8-321 of the Uniform
-3-
Commercial Code, as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities.
10. Power of Attorney.
-----------------
10.1. Appointment and Powers of NMT. The Guarantor hereby irrevocably
-----------------------------
constitutes and appoints NMT and any officer or agent thereof, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of the Guarantor or
in NMT's own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and
all documents and instruments that may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and
right, on behalf of the Guarantor, without notice to or assent by the
Guarantor, to do the following:
(a) upon the occurrence and during the continuance of an
event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Massachusetts
Uniform Commercial Code and as fully and completely as though NMT
were the absolute owner thereof for all purposes, and to do at the
Guarantor's expense, at any time, or from time to time, all acts and
things which NMT deems necessary to protect, preserve or realize upon
the Collateral and NMT's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as
the Guarantor might do, including, without limitation, (i) the filing
and prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and processes, (ii)
upon written notice to the Guarantor, the exercise of voting rights
with respect to voting securities, which rights may be exercised, if
NMT so elects, with a view to causing the liquidation in a
commercially reasonable manner of assets of the issuer of any such
securities and (iii) the execution, delivery and recording, in
connection with any sale or other disposition of any Collateral, of
the endorsements, assignments or other instruments of conveyance or
transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto,
with or without the Guarantor's signature, or a photocopy of this
Agreement in substitution for a financing statement, as NMT may deem
appropriate and to execute in the Guarantor's name such financing
statements and amendments thereto and continuation statements which
may require the Guarantor's signature.
-4-
10.2. Ratification by Guarantor. To the extent permitted by law, the
-------------------------
Guarantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
10.3 No Duty on NMT. The powers conferred on NMT hereunder are
--------------
solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. NMT shall be accountable only for
the amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Guarantor for any act or failure to act,
except for NMT's own gross negligence or willful misconduct.
11. Remedies. If an event of Default shall have occurred and be
--------
continuing, NMT may, without notice to or demand upon the Guarantor, declare
this Agreement to be in default, and NMT shall thereafter have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose NMT may, so far as the
Guarantor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. NMT may in its
discretion require the Guarantor to assemble all or any part of the Collateral
at such location or locations within the state(s) of the Guarantor's principal
office(s) or at such other locations as NMT may designate. Unless the Collateral
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, NMT shall give to the Guarantor at
least five Business Days prior written notice of the time and place of any
public sale of Collateral or of the time after which any private sale or any
other intended disposition is to be made. The Guarantor hereby acknowledges
that five Business Days prior written notice of such sale or sales shall be
reasonable notice. In addition, the Guarantor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of NMT's
rights hereunder, including, without limitation, its right following an event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto.
12. No Waiver, etc. The Guarantor waives demand, notice, protest, notice
--------------
of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, the Guarantor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in
-5-
such manner and at such time or times as NMT may deem advisable. NMT shall have
no duty as to the collection or protection of the Collateral or any income
thereon, nor as to the preservation of rights against prior parties, nor as to
the preservation of any rights pertaining thereto. NMT shall not be deemed to
have waived any of its rights upon or under the Obligations or the Collateral
unless such waiver shall be in writing and signed by NMT. No delay or omission
on the part of NMT in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right on any future occasion. All rights and
remedies of NMT with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as NMT deems expedient.
13. Marshalling. NMT shall not be required to marshal any present or
-----------
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that
it lawfully may, the Guarantor hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of NMT's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Guarantor hereby irrevocably waives the benefits of all such laws.
14. Proceeds of Dispositions; Expenses. The Guarantor shall pay to NMT on
----------------------------------
demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by NMT in protecting, preserving or enforcing
NMT's rights under or in respect of any of the Obligations or any of the
Collateral. After deducting all of said expenses, the residue of any proceeds of
collection or sale of the Obligations or Collateral shall, to the extent
actually received in cash, be applied to the payment of the Obligations in such
order or preference as NMT may determine, proper allowance and provision being
made for any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by
Section 9-504(l)(c) of the Massachusetts Uniform Commercial Code, any excess
shall be returned to the Guarantor, and the Guarantor shall remain liable for
any deficiency in the payment of the Obligations.
-6-
15. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED
--------------------------------------
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Guarantor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of The Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Guarantor by mail at the address
specified in of the Loan and Security Agreement. The Guarantor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
16. Waiver of Jury Trial. THE GUARANTOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Guarantor
waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Guarantor (i) certifies that neither NMT nor any representative,
agent or attorney of NMT has represented, expressly or otherwise, that NMT would
not, in the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Loan and Security Agreement, NMT is
relying upon, among other things, the waivers and certifications contained in
this (S)19.
17. Miscellaneous. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Guarantor and its respective successors and assigns, and shall inure to the
benefit of NMT and its successors and assigns. If any term of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity of all other
terms hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. The Guarantor acknowledges receipt of a copy of
this Agreement.
-7-
IN WITNESS WHEREOF, intending to be legally bound, the Guarantor has caused
this Agreement to be duly executed as of the date first above written.
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
NITINOL MEDICAL TECHNOLOGIES, INC.
By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF MASSACHUSETTS
) ss.
COUNTY OF _____________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 28th day of May, 1997, personally appeared ________________
to me known personally, and who, being by me duly sworn, deposes and says that
he is ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, and that said instrument was signed and sealed on
behalf of said, and said acknowledged said instrument to be the free act and
deed of said trust.
----------------------------------
Notary Public
My commission
-9-
Exhibit C-2
-----------
GUARANTEE
This GUARANTEE is made as of May 29, 1997, by ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, an
individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Guarantor"), in favor of Nitinol Medical Technologies, Inc., a Delaware
corporation having a principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Lender"). Capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in that certain Loan and Security Agreement of
even date herewith by and between the Borrower (as defined below) and the Lender
(the "Loan Agreement"). In consideration of the Lender's entering into the Loan
Agreement with Image Technologies Corporation, a Delaware corporation having a
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Borrower"), and for other good and valuable consideration, the receipt of which
are hereby acknowledged, the Guarantor agrees as follows:
1. GUARANTEE OF PAYMENT AND PERFORMANCE. The Guarantor hereby guarantees
to the Lender the full and punctual payment when due (whether at maturity, by
acceleration or otherwise), and the performance of all liabilities, agreements
and other obligations of the Borrower to the Lender, including, without
limitation, any and all obligations of the Borrower to the Lender arising out of
or related to the Loan Agreement, the Loan Documents or the Lender Guarantees,
whether direct or indirect, absolute or contingent, due or to become due,
secured or unsecured, now existing or hereafter arising or acquired (the
"Obligations"). This Guarantee is an absolute, unconditional and continuing
Guarantee of the full and punctual payment and performance of the Obligations
and not of their collectibility only and is in no way conditioned upon any
requirement that the Lender first attempt to collect any of the Obligations from
the Borrower or resort to any security or other means of obtaining their
payment. Should the Borrower default in the payment or performance of any of
the Obligations, or should the Borrower or the Guarantor become insolvent or
make a composition, trust mortgage or general assignment for the benefit of
creditors, or if a proceeding under any federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law affecting the
rights of creditors generally be filed or commenced by, against or in respect of
the Borrower or the Guarantor, the obligations of the Guarantor hereunder shall
become immediately due and payable to the Lender, without demand or notice of
any nature, all of which are expressly waived by the Guarantor. Payments by the
Guarantor hereunder may be required by the Lender on any number of occasions.
2. GRANT OF SECURITY INTEREST. To secure payment and performance of
Guarantor's Obligations hereunder, the Guarantor hereby grants to the Lender a
continuing lien on and security interest in the following properties, assets and
rights of the Guarantor, wherever located, whether now owned or hereafter
acquired or arising: all patents, patent applications, trademarks, trademark
applications (including, without limitation, those listed in Schedule I, hereto
----------
and made part hereof), license fees, income, royalties, trade names, copyrights,
copyright applications, rights to ▇▇▇ and recover for past infringement of
patents, present and future trademarks and copyrights, license fees, computer
programs, computer software, engineering drawings, service marks, customer
lists, goodwill, and all licenses, permits, agreements of any kind or nature
pursuant to which the Guarantor possesses, uses or has authority to possess or
use property (whether tangible or intangible) of others or others possess, use
or have authority to possess or use property (whether tangible or intangible) of
the Guarantor, and all recorded data of any kind or nature, regardless of the
medium of recording including, without limitation, all software, writings,
plans, specifications and schematics, and all of Guarantor's rights to any of
the foregoing throughout the world (collectively, the "Pledged Collateral"). In
connection therewith, Guarantor agrees to execute and file in the United States
Patent and Trademark Office the Grant of Security Interest (Patents) in
substantially the form attached hereto as Exhibit A, and any and all additional
---------
documents, instruments and certificates as the Lender may reasonably require in
order to secure the Obligations.
3. GUARANTOR'S AGREEMENT TO PAY. The Guarantor further agrees, as the
principal obligor and not as a guarantor only, to pay to the Lender, on demand,
all costs and expenses (including court costs, expenses and reasonable
attorney's fees) incurred or expended by the Lender in connection with the
Obligations, this Guarantee and the enforcement thereof, together with interest
on amounts recoverable under this Guarantee from the time such amounts become
due until payment, at the rate per annum equal to thirteen (13%) percent;
provided that if such interest exceeds the maximum amount permitted to be paid
under applicable law, then such interest shall be reduced to such maximum
permitted amount.
4. LIMITED GUARANTEE. The Lender's sole recourse against the Guarantor
under this Guarantee shall be to the Pledged Collateral.
5. WAIVERS BY GUARANTOR; LENDER'S FREEDOM TO ACT. The Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lender with respect thereto. The Guarantor waives presentment,
demand, protest, notice of acceptance, notice of Obligations incurred and all
other notices of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshalling of assets of the Borrower, and all
suretyship defenses generally. Without limiting the generality of the
foregoing, the Guarantor agrees to the provisions of any instrument evidencing,
securing or otherwise executed in connection with any Obligation and agrees that
the obligations of the Guarantor hereunder shall not be released or discharged,
in whole or in part, or otherwise affected by (i) the failure of the Lender to
assert any claim or demand or to enforce any right or remedy against the
Borrower; (ii) any extensions or renewals of any Obligation; (iii) any
rescissions, waivers, amendments or modifications of any of the terms or
provisions of any agreement evidencing, security or otherwise executed in
connection with any Obligation; (iv) the substitution or release of any entity
primarily or secondarily liable for any Obligation; (v) the adequacy of any
rights the Lender may have against any collateral or other means of obtaining
repayment of the Obligations; (vi) the impairment of any collateral securing the
Obligations, including without limitation the failure to perfect or preserve any
rights the Lender might have in such
-2-
collateral or the substitution, exchange, surrender, release, loss or
destruction of any such collateral; or (vii) any other act or omission which
might in any manner or to any extent vary the risk of the Guarantor or otherwise
operate as a release or discharge of the Guarantor, all of which may be done
without notice to the Guarantor.
6. APPLICATION OF PROCEEDS. Any and all proceeds realized or obtained by
the Lender under this Guarantee shall be applied to the amounts outstanding
under the Loan Agreement or any other Loan Document, after payment of any and
all expenses, attorney's fees and other costs of collection hereunder in
accordance with the following:
(a) All such proceeds shall first be applied to the payment of any and
all expenses, charges or other amounts which may be due and owing
under the Loan Agreement or the Loan Documents;
(b) Any and all such proceeds remaining after application as provided
in paragraph (a) above shall be applied to the payment of any
principal, interest or charges outstanding under the Loan
Agreement or the Loan Documents in accordance therewith, or if not
provided, in the Lender's sole discretion; and
(c) Any surplus remaining after application as provided in paragraphs
(a) and (b) above, shall be paid or returned to Guarantor, or its
successors or assigns or to whomsoever may be lawfully entitled to
receive the same.
7. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason
the Borrower has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Borrower by operation of law or for any other reason, including,
without limitation, any release or discharge under any federal or state
bankruptcy, reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, this Guarantee shall nevertheless
be binding on the Guarantor to the same extent as if the Guarantor at all times
had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, or for any other
reason, all such amounts otherwise subject to acceleration under the terms of
any agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantor.
8. SUBROGATION; SUBORDINATION. The Guarantor shall not exercise any
rights and hereby waives any and all claims against the Borrower arising as a
result of payment by the Guarantor hereunder, by way of subrogation or
otherwise, and will not prove any claim in competition with the Lender or its
affiliates in respect of any payment hereunder in bankruptcy or insolvency
proceedings of any nature; the
-3-
Guarantor will not claim any set-off or counterclaim against the Borrower in
respect of any liability of the Guarantor to the Borrower; and the Guarantor
waives any benefit of and any right to participate in any collateral which may
be held by the Lender or any such affiliate. The payment of any amounts due
with respect to any indebtedness of the Borrower now or hereafter held by the
Guarantor is hereby waived and postponed and subordinated to the prior payment
in full of the Obligations. The Guarantor agrees that after the occurrence of
any default in the payment or performance of the Obligations by the Borrower,
the Guarantor will not demand, ▇▇▇ for or otherwise attempt to collect any such
indebtedness of the Borrower to the Guarantor until the Obligations shall have
been paid in full. If, notwithstanding the foregoing sentence, the Guarantor
shall collect, enforce or receive any amounts in respect of such indebtedness,
such amounts shall be collected, enforced and received by the Guarantor as
trustee for the Lender and be paid over to the Lender on account of the
Obligations without affecting in any manner the liability of the Guarantor under
the other provisions of this Guarantee.
9. ENFORCEABILITY. This Guarantee constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, and will not contravene any existing law, rule or
regulation, or any agreement, order, judgment or decree to which Guarantor is a
party or by which Guarantor is bound.
10. FURTHER ASSURANCES. The Guarantor agrees that it will promptly
provide to the Lender, copies of such information relating to the affairs of the
Guarantor as the Lender may reasonably request. The Guarantor also agrees to do
all such things and execute all such documents, including financing statements,
as the Lender may consider necessary or desirable to give full effect to this
Guarantee and to perfect and preserve the rights and powers of the Lender
hereunder.
11. TERMINATION; REINSTATEMENT. This Guarantee shall remain in full force
and effect until the payment is received in full of the Obligations. This
Guarantee shall continue to be effective or be reinstated, if at any time any
payment made or value received with respect to an Obligation is rescinded or
must otherwise be returned by the Lender upon the insolvency, bankruptcy or
reorganization of the Borrower, or otherwise, all as though such payment had not
been made or value received.
12. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Lender and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, the Lender may assign or
otherwise transfer any agreement or any note held by it evidencing, securing or
otherwise executed in connection with the Obligations, to any other person or
entity, and such other person or entity shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment or transfer, with
all the rights in respect thereof granted to the Lender herein.
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13. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guarantee nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Lender. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
14. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class mail postage prepaid or, in the case of facsimile, when transmitted,
addressed as follows: if to the Guarantor, at the address set forth above, and
if to the Lender, at the address set forth above, with a copy to ▇▇▇▇ and ▇▇▇▇
LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., or at such address as either party may designate in writing.
15. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
COMMONWEALTH OF MASSACHUSETTS.
16. CONSENT TO JURISDICTION. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURT OF MASSACHUSETTS FOR THE PURPOSE OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE AND THE
GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING
PROCEEDINGS AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE GUARANTOR AGAINST THE LENDER OR ANY AFFILIATE OF THE
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS GUARANTEE SHALL BE BROUGHT ONLY IN A COURT IN
THE COMMONWEALTH OF MASSACHUSETTS.
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17. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS GUARANTEE OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
18. MISCELLANEOUS. The Guarantee constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive to any remedies provided by law
or any other agreement. The invalidity or unenforceability of any one or more
sections of this Guarantee shall not affect the validity or enforceability of
its remaining provisions. Captions are for the ease of reference only and shall
not affect the meaning of the relevant provisions. The meanings of all defined
terms used in this Guarantee shall be equally applicable to the singular and
plural forms of the terms defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed
and delivered as of the date appearing on page one.
Witness:
----------------------------
-------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
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Exhibit D
---------
[Date]
Nitinol Medical Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
Re: Loan and Security Agreement, dated as of May 29, 1997,
between Image Technologies Corporation (the "Company")
and Nitinol Medical Technologies, Inc. (the "Lender")
------------------------------------------------------
We have acted as counsel to the Company, a Delaware corporation and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ (the "Guarantor") in connection with the Loan and Security
Agreement by and between the Company and the Lender dated as of May 29, 1997 (as
the same may be amended from time to time, the "Loan and Security Agreement")
and the other Loan Documents (defined hereinafter). Capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to them
in the Loan and Security Agreement.
For purposes of the opinions expressed below, we have examined:
a. the Loan and Security Agreement;
b. the Revolving Credit Note;
c. the Guarantee;
d. the Security Agreement;
e. the Grant of Security Interest (Patents) of the Guarantor;
f. the Grant of Security Interest (Trademarks) of the Company;
g. such other documents, instruments and certificates delivered by the
Company in connection with the transaction contemplated by the Loan
and Security Agreement;
h. UCC-1 financing statements to be filed in the filing offices listed on
Schedule I (the "Financing Statements");
--------------------
i. the By-laws of the Company, as in effect on the date hereof, provided
to us by the Company;
j. the corporate minute books of the Company, as provided to us by the
Company;
k. certificates of legal existence and corporate good standing for the
Company as identified on Schedule II;
l. certified copies of resolutions of the board of directors of the
Company approving the transactions contemplated by the Loan Documents
(defined hereinafter) and authorizing, among other things, the
execution, delivery and performance by the Company of each of the Loan
Documents (defined hereinafter) to which it is a party;
m. incumbency and signature certificates as to the officers of the
Company; and
n. such other documents, instruments and certificates (including, but not
limited to, certificates of public officials and officers of the
Company) considered necessary for purposes of this opinion.
The documents referred to in items (a) through (n) above are herein
referred to as the "Loan Documents." In examining the documents described
above, we have assumed the genuineness of all signatures other than those of the
Company, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals and the conformity to the originals of
all documents submitted to us as copies.
For purposes of this opinion, we have assumed that the Lender has the power
to execute, deliver and perform all agreements, documents and certificates
executed by the Lender; that the Lender has duly and validly executed and
delivered such agreements, documents and certificates; and that such agreements,
documents and certificates are legally valid and binding on and enforceable
against the Lender.
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On the basis of and subject to the foregoing, we are of the opinion that:
1. The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware and is in good standing and
authorized to do business in each other jurisdiction where such
authorization is necessary to conduct the Company's business as
contemplated by the Loan Documents to which it is a party.
2. The Company has full corporate power and authority to (i) own its
real and personal property and to carry on its business as now
conducted, (ii) enter into, execute and deliver each of the Loan
Documents to which it is a party and (iii) carry out the terms of the
Loan Documents to which it is a party all of which have been duly
authorized by all proper and necessary corporate action. In addition,
the Company has full corporate power and authority to make the
borrowings contemplated by the Loan Documents, to execute, deliver and
carry out the terms of the Revolving Credit Note and to incur the
obligations provided for therein, all of which have been duly
authorized by all proper and necessary corporate action.
3. The execution and delivery by the Company and the Guarantor of the
Loan Documents to which they are a party, do not, and the performance
thereunder will not result in any violation of, be in conflict with,
constitute a default under, give rise to any obligation to redeem
securities under, or except for the security interests securing the
Loan and Security Agreement and the other Loan Documents, result in
the creation of a lien or encumbrance under, any term or provision of:
(a) the charter or by-laws of the Company (b) any presently existing
federal or state law, statute or governmental regulation, (c) any
judgment, decree or order known to us in which the Company or the
Guarantor, as the case may be, is named as a party, or (e) any
material agreement to which the Company or the Guarantor, as the case
may be, is a party.
4. Upon the Lender making the Revolving Credit Loan pursuant to the Loan
and Security Agreement, the provisions of the Loan and Security
Agreement, the Security Agreement, the Grant of Security Interest
(Trademarks) executed by the Company and the Grant of Security
Interest (Patents) executed by the Guarantor are sufficient to create
in favor of the Lender a security interest in the Collateral and the
Pledged Collateral (as defined in the Guaranty Agreement), of each of
the respective parties thereto. Upon the filing of the Financing
Statements in the filing offices listed on Schedule I hereto, the
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Lender will hold a first priority perfected security interest in the
Collateral and the Pledged Collateral, as the case
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may be, in which a security interest may be perfected by the filing of
financing statements under Article 9 of the Uniform Commercial Code as
in effect in the jurisdictions in which the filing offices are
located. Upon the filing of the Grant of Security Interest (Patents)
in the United States Patent and Trademark Office and the filing of the
Grant of Security Interest (Trademarks) in the United States Patent
and Trademark Office, the Lender will hold a first priority perfected
security interest in the Pledged Collateral and the Collateral, as the
case may be, in which a security interest may be perfected by such
filings.
5. No consent, authorization or approval of, filing with, notice to, or
exemption by, stockholders, any governmental body or any other person
(except for those which have been obtained, made or given) (i) is
required to authorize, or is required in connection with, the
execution, delivery and performance of the Loan Documents or (ii) is
required as a condition to the validity or enforceability of the Loan
Documents.
6. There are no actions, suits or proceedings at law or in equity or by
or before any governmental body (whether or not purportedly on behalf
of the Company) pending or threatened against the Company, or any of
its property or rights, which (i) if adversely determined, could
reasonably be expected to have a material adverse effect on the
Company, or (ii) call into question the validity of or the
enforceability of any of the Loan Documents.
7. To our knowledge, neither the Company nor the Guarantor is in default
under any mortgage, indenture, contract, agreement, judgment, decree
or order to which it is a party or by which it is bound. The
execution or delivery of the Loan Documents and the carrying out of
the terms of the Loan Documents will not constitute a default under,
conflict with, require any consent under (other than consents which
have been obtained) or result in the creation or imposition of, or
obligation to create, any lien upon the property of the Company or the
Guarantor pursuant to the terms of any such mortgage, indenture,
contract, agreement, judgment, decree or order.
This opinion is based upon currently existing statutes, rules, regulations
and judicial decisions, and we disclaim any obligation to advise you of any
change in any of these sources of law or other subsequent development which
might affect any matters or opinions set forth herein.
-4-
This opinion is being delivered to the Lender in connection with the Loan
Documents and may not be relied upon by any other person or entity (other than
by ▇▇▇▇ and ▇▇▇▇ LLP, as counsel to the Lender, and any assigns of the Lender),
or for any other purpose without our prior written consent.
Very truly yours,
[____________________]
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Schedule I to
Opinion of [_____________________]
Filing Offices
--------------
Schedule II to
Opinion of [___________________]
Certificates of Good Standing,
------------------------------
Legal Existence and Foreign Qualifications
------------------------------------------
A. Good Standing and Legal Existence
---------------------------------
1. A Certificate of the Secretary of State of the State of Delaware dated
___________________, attesting to the continued legal existence and
good standing of the Company.
B. Foreign Qualifications
----------------------
1. A Certificate of good standing as a foreign corporation for the
Company dated ______________________, issued by the Secretary of State
of the Commonwealth of Massachusetts.
EXHIBIT E(1)
To
Loan and Security Agreement
Dated as of May __, 1997
GRANT OF SECURITY INTEREST (TRADEMARKS)
---------------------------------------
Image Technologies Corporation, a Texas corporation (the "Borrower"), is
obligated to Nitinol Medical Technologies, Inc., as Lender (the "Secured
Party"), and has entered into a Loan and Security Agreement dated the date
hereof (the "Loan and Security Agreement") in favor of the Secured Party.
Pursuant to the Loan and Security Agreement, the Borrower granted to the
Secured Party a security interest in all of the right, title and interest of the
Borrower in and to the trademarks listed on Schedule A attached hereto, which
----------
trademarks are registered in the United States Patent and Trademark Office (the
"Trademarks"), together with the goodwill of the business symbolized by the
Trademarks and the applications and registrations thereof, and all proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof (the "Collateral"), to secure the prompt
payment, performance and observance of the Obligations (as defined in the Loan
and Security Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the Secured
Party, and grant to the Secured Party, subject to the provisions of the Loan and
Security Agreement, a security interest in, the Collateral to secure the prompt
payment, performance and observance of the Obligations.
The Borrower does hereby further acknowledge and affirm that the rights and
remedies of the Secured Party with respect to the assignment of and security
interest in the Collateral made and granted hereby are set forth in the Loan and
Security Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Until an Event of Default has occurred and is continuing, Secured Party
hereby grants to the Borrower, a license to use the Collateral in connection
with the operations and management of its business. Borrower agrees that all
goods and services provided under any of the Trademarks shall be of the same
quality as the goods and services provided presently by the Borrower.
Upon the indefeasible cash payment in full of all Obligations (as such term
is defined in the Loan and Security Agreement), the Secured Party will take
whatever actions are necessary at the Borrower's expense to release or reconvey
to Borrower all right, title and interest of the Borrower in and to the
Collateral.
The Secured Party's address is: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
IN WITNESS WHEREOF, the Borrower has caused this Grant of Security Interest
(Trademarks) to be duly executed by its duly authorized officer as of the ____
day of May, 1997
WITNESS: IMAGE TECHNOLOGIES CORPORATION
By:
---------------------------------
Name:
Title:
STATE OF __________ )
)
COUNTY OF __________ )
On this ____ day of May, 1997, before me personally came __________, to me
known, who, being by me duly sworn, did depose and say that he is a __________
of Image Technologies Corporation, the corporation described in and which
executed the above instrument, and that he signed his name thereto by order of
the board of directors thereof.
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Notary Public
My Commission Expires:
-2-
EXHIBIT E(2)
TO
Loan and Security Agreement
Dated as of May __, 1997
GRANT OF SECURITY INTEREST (PATENTS)
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Image Technologies Corporation, a Texas corporation (the "Borrower"), is
obligated to Nitinol Medical Technologies, Inc., as Lender (the "Secured
Party"), and has entered into a Loan and Security Agreement dated the date
hereof (the "Loan and Security Agreement") in favor of the Secured Party.
Pursuant to the Loan and Security Agreement, the Borrower granted to the
Secured Party a security interest in all of the right, title and interest of the
Borrower in and to the patents and patent applications listed on Schedule A
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attached hereto, which patents and patent applications are registered in the
United States Patent and Trademark Office (the "Patents"), and all proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof (the "Collateral"), to secure the prompt
payment, performance and observance of the Obligations (as defined in the Loan
and Security Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of recording the grant of the security
interest as aforesaid, the Borrower does hereby further assign to the Secured
Party, and grant to the Secured Party, subject to the provisions of the Loan and
Security Agreement, a security interest in, the Collateral to secure the prompt
payment, performance and observance of the Obligations.
The Borrower does hereby further acknowledge and affirm that the rights and
remedies of the Secured Party with respect to the assignment of and security
interest in the Collateral made and granted hereby are set forth in the Loan and
Security Agreement, the terms and provisions of which are hereby incorporated
herein by reference as if fully set forth herein.
Until an Event of Default has occurred and is continuing, Secured Party
grants to Borrower a license to use the Collateral in connection with the
operation and management of its business.
Upon the indefeasible cash payment in full of all Obligations (as such term
is defined in the Loan and Security Agreement), the Secured Party will take
whatever actions are necessary at the Borrower's expense to release or reconvey
to Borrower all right, title and interest of the Borrower in and to the
Collateral.
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The Secured Party's address is: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
IN WITNESS WHEREOF, the Borrower has caused this Grant of Security Interest
(Patents) to be duly executed by its duly authorized officer as of the ____ day
of May, 1997.
WITNESS: IMAGE TECHNOLOGIES CORPORATION
By:
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Name:
Title:
STATE OF __________ )
)
COUNTY OF _________ )
On this ____ day of May, 1997, before me personally came __________, to me
known, who, being by me duly sworn, did depose and say that he is a __________
of Image Technologies Corporation, the corporation described in and which
executed the above instrument, and that he signed his name thereto by order of
the board of directors thereof.
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Notary Public
My Commission Expires:
-2-