EXHIBIT 10.4
AMENDED AND RESTATED STOCKHOLDERS' OPTION AGREEMENT
This Amended and Restated Stockholders' Option Agreement (the "Agreement")
is made this 30th day of March, 1999, by and among Nitinol Medical Technologies,
Inc., a Delaware corporation (the "Purchaser"), Image Technologies Corporation,
a Delaware corporation (the "Company"), and the holders (the "Stockholders") of
(1) the shares of common stock, $.01 par value per share ("Common Stock") and
(2) the warrants to purchase shares of Common Stock ("Warrants"), of the Company
listed on Schedule A hereto. All such shares of Common Stock, together with the
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Warrants, are collectively referred to as the "Shares."
Recitals:
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WHEREAS, (a) the Purchaser and the Company entered into a Series A
Preferred Stock Purchase Agreement dated as of May 29, 1997 (the "Series A
Purchase Agreement"), pursuant to which the Purchaser purchased an aggregate of
345,722 shares of the Company's Series A Convertible Preferred Stock, $.01 par
value per share (the "Series A Preferred"), and (b) in connection with the
execution and delivery of the Series A Purchase Agreement, the Company, the
Purchaser and certain of the Stockholders entered into a Stockholders' Option
Agreement (the "Option Agreement") of even date therewith, and as subsequently
amended, providing the Purchaser with an option to purchase all Shares owned by
such Stockholders;
WHEREAS, the Company and Argo Capital Partners I L.P., a Delaware limited
partnership ("Argo Capital") entered into a Stock Purchase Agreement of even
date herewith (the "Purchase Agreement"), pursuant to which Argo Capital
purchased an aggregate of 120,361 shares of Common Stock and pursuant to which
39,159 shares of Series A Convertible Preferred Stock of the Company were issued
to the Purchaser;
WHEREAS, the parties wish to amend and restate the Option Agreement to,
among other things, (a) consent to any transfers of Shares made by Stockholders
prior to the date hereof and (b) include Argo Capital as a "Stockholder" and the
Common Stock issued or to be issued to Argo Capital as "Shares" for all purposes
under the Option Agreement.
In consideration of the mutual covenants contained herein and for other
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
STOCK OPTION
Section 1.1 Grant of Stock Option. Each of the Stockholders hereby grants
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to the Purchaser an irrevocable option (the "Option") to purchase all Shares
currently owned by such Stockholder as set forth on Schedule A hereto and any
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additional Shares acquired by such Stockholder (whether by purchase, dividend,
stock split, recapitalization or otherwise) after the date of this Agreement
(all such Shares being referred to as the "Stockholder's Shares" and,
collectively, as the "Stockholder Shares"). The aggregate purchase price payable
by the Purchaser for the Stockholder Shares is $24,500,000, to be paid pro rata
per Stockholder Share, thirty-two percent (32%) of which shall be paid in cash
and the balance of which shall be paid in shares of common stock, $.001 par
value per share, of the Purchaser (the "Purchaser Common Stock") (as it may be
adjusted pursuant to Section 1.6, collectively, the "Purchase Price"). For
purposes of the foregoing, the Purchaser Common Stock shall be valued at the
average of the closing prices of Purchaser Common Stock as reported by the
Nasdaq National Market System on each of the last ten trading days ending five
business days prior to the Closing (as defined below).
Section 1.2 Exercise of Option.
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(a) The Option may be exercised by the Purchaser, in whole but not in
part, at any time after the date hereof and prior to the Option Extension
Deadline (as defined below), subject to extension as provided in this paragraph
(a). No later than April 30, 1999, the Company shall provide the Purchaser with
a certificate (the "Certificate") signed by its President certifying as to the
Company's cumulative pre-tax losses ("Pre-Tax Losses") for the period from April
1, 1997 through March 31, 1999. In the event such Pre-Tax Losses are in excess
of $2,171,000, the Purchaser, in its sole discretion, shall have 30 days
following receipt of the Certificate (the end of such 30-day period being
referred to herein as the "Option Extension Deadline") to elect to extend the
option exercise period for an additional six-month period. For purposes of the
foregoing, any amounts accrued by the Company for the payment of bonuses
pursuant to Section 3 of the employment agreements of even date herewith between
the Company and each of ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and any
accrued interest on borrowings of the Company under that certain Loan and
Security Agreement (the "Loan and Security Agreement") of even date herewith
between the Purchaser and the Company, shall not be included in any calculation
of Pre-Tax Losses. In the event the Purchaser elects to extend the option
exercise period it shall provide written notice to such effect to each of the
Stockholders on or before the Option Extension Deadline.
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(b) In the event the Purchaser wishes to exercise the Option for the
Stockholder Shares, the Purchaser shall send a written notice (the "Exercise
Notice") to the Stockholders specifying the place, the date (not more than 120
days from the date of the Exercise Notice), and the time for the closing of such
purchase. The closing of the purchase of Stockholder Shares pursuant to this
Section 1.2(b) (the "Closing") shall occur at the place, on the date and at the
time designated by the Purchaser in its Exercise Notice, provided that if, at
the date of the Closing herein provided for, the conditions set forth in
Sections 1.4 and 1.5 shall not have been satisfied (or waived), the Purchaser
may postpone the Closing until a date within five business days after such
conditions are satisfied. Any such postponement shall not relieve the
Stockholders of any liability for failure to meet the conditions specified in
Section 1.5 hereof.
(c) The Purchaser shall not be under any obligation to deliver an
Exercise Notice and may allow the Option to terminate without purchasing any
Stockholder Shares hereunder; provided, however, that once the Purchaser has
delivered to the Stockholders an Exercise Notice, subject to the terms and
conditions of this Agreement and the satisfaction of the provisions of Section
1.5 hereof, the Purchaser shall be bound to effect the purchase as described in
such Exercise Notice.
Section 1.3 Closing. At the Closing, (a) each Stockholder shall deliver to
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the Purchaser (in accordance with the Purchaser's instructions) a certificate or
certificates (the "Certificates") representing the number of such Stockholder's
Shares to be purchased at such Closing, duly endorsed or accompanied by stock
powers duly executed in blank and (b) the Purchaser shall deliver to such
Stockholder (i) a certified or bank cashier's check or checks payable to or upon
the order of such Stockholder in the amount set forth opposite such
Stockholder's name on Schedule A hereto and (ii) a certificate representing
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shares of Purchaser Common Stock valued in accordance with Section 1.1.
Section 1.4 Stockholder Conditions. The obligation of each Stockholder to
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sell Stockholder Shares at the Closing is subject to the following conditions:
(i) The representations and warranties of the Purchaser contained in
Article IV shall be true and correct in all material respects on the date
thereof as if made on such date.
(ii) All waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") applicable to the exercise of the
Option shall have expired or been terminated.
(iii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by a
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court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, nor any statute, rule, regulation or
order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining the purchase of the Stockholder Shares pursuant to
the exercise of the Option.
(iv) All Stockholder Shares are purchased at the Closing.
Section 1.5 Purchaser's Conditions. The obligation of the Purchaser to
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purchase the Stockholder Shares at the Closing is subject to the following
conditions:
(i) The representations and warranties of the Stockholders and the
Company contained in Article II and Article Ill, respectively, shall be
true and correct in all material respects on the date thereof as if made on
such date.
(ii) All waiting periods under the HSR Act applicable to the exercise
of the Option shall have expired or been terminated.
(iii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining the purchase
of the Stockholder Shares pursuant to the exercise of the Option.
(iv) The Company shall have complied with its covenants in Article VI
of this Agreement.
Section 1.6 Adjustment Upon Changes in Capitalization or Merger.
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In the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations, recapitalizations,
combinations, conversions, exchanges of shares, extraordinary or liquidating
dividends, or other changes in the corporate or capital structure of the Company
which would have the effect of diluting or changing the Purchaser's rights
hereunder, the number and kind of shares or securities subject to the Option and
the Purchase Price per Stockholder Share (but not the total Purchase Price)
shall be appropriately and equitably adjusted so that the Purchaser shall
receive upon exercise of the Option the number and class of shares or other
securities or property that the Purchaser would have received in respect of the
Stockholder Shares purchasable upon exercise of the Option if the Option had
been exercised immediately prior to such event. Each Stockholder shall take such
steps in connection with such consolidation, merger, liquidation or other such
action as may be necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter deliverable
upon exercise of the Option.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants to the Purchaser
as follows:
Section 2.1 Title to Shares. Such Stockholder has good and marketable
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title to the Stockholder's Shares free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever. Schedule A
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attached hereto sets forth a true and correct description of all shares of (and
rights to acquire) capital stock of the Company owned by such Stockholder.
Schedule B attached hereto is a true and complete list of the stockholders,
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optionholders, warrantholders and other security holders of the Company showing
(i) the number of shares of Common Stock, Preferred Stock or other securities or
rights of the Company held by each Stockholder as of the date of this Agreement
and the consideration paid to the Company, if any, therefore, and (ii) the fully
diluted percentage interest in the Company held by each Stockholder, after
giving effect to the transactions contemplated hereby and the exercise of all
options, warrants or other rights or securities convertible into or exchangeable
or exercisable for Common Stock or other securities of the Company (including
shares issued or issuable under the Company's 1997 Stock Option Plan and shares
issuable upon exercise of any warrants issued or issuable to Junewicz & Company
("Junewicz," and any such warrants referred to collectively as the "Junewicz
Warrants") pursuant to that certain engagement letter dated May 23, 1997 between
the Company and Junewicz (the "Junewicz Agreement") and (iii) the number of
shares of Common Stock or other securities of the Company issuable upon the
exercise of options, warrants or other rights held by each optionholder,
warrantholder or rights holder as of the date of this Agreement, together with
the grant date, exercise price, vesting schedule and expiration date of each
outstanding option, warrant or other right. Except as set forth on Schedule B,
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there are no shares of Common Stock, preferred stock or other securities or
capital stock of the Company issued or outstanding. Except as set forth on
Schedule B attached hereto (i) no subscription, warrant, option, convertible
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security or other right (contingent or otherwise) to purchase or acquire any
shares of capital stock of the Company is authorized or outstanding, (ii) the
Company has no obligation (contingent or otherwise) to issue any subscription,
warrant, option, convertible security or other such right or to issue or
distribute to holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company and (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
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Section 2.2 Authority. Such Stockholder has the full right, power and
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authority to enter into this Agreement and to transfer, convey and sell to the
Purchaser at the Closing the Stockholder's Shares to be sold by such Stockholder
hereunder and, upon consummation of the purchase contemplated hereby, the
Purchaser will acquire from such Stockholder good and marketable title to such
Stockholder's Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever. Such Stockholder has duly executed and delivered
this Agreement and this Agreement constitutes the valid and binding obligation
of such Stockholder enforceable against such Stockholder in accordance with its
terms. The execution of and performance of the transactions contemplated by this
Agreement and compliance with its provisions by such Stockholder will not
violate any provision of law and will not conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute a default under,
or require a consent or waiver under, the Certificate of Incorporation or By-
Laws of the Company (each as amended to date) or any agreement or instrument to
which such Stockholder is a party or by which he or any of his properties is
bound, or any decree, judgment, order, statute, rule or regulation applicable to
such Stockholder.
Section 2.3 Government Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of such
Stockholder or the Company in connection with the execution and delivery of this
Agreement or the transactions to be consummated at the Closing, as contemplated
by this Agreement (except that the pre-merger notification provisions of the HSR
Act may apply).
Section 2.4 Litigation. Such Stockholder is not a party to, subject to or
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bound by any agreement or any judgment, order, writ, prohibition, injunction or
decree of any court or other government body, and there is no action, suit or
proceeding or governmental inquiry or investigation pending which would prevent
the execution or delivery of this Agreement by such Stockholder or the transfer,
conveyance and sale of the Stockholder's Shares to be sold by such Stockholder
to the Purchaser pursuant to the terms hereof.
Section 2.5 Brokers. No broker or finder has acted for such Stockholder in
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connection with this agreement or the transactions contemplated hereby, except
that, pursuant to the Junewicz Agreement, a true and correct copy of which is
attached hereto as Schedule C, the Company has retained Junewicz in connection
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with the transactions contemplated by this Agreement and, except for
compensation due to Junewicz, no broker or finder is entitled to any brokerage
or finder's fee or other commissions in respect of such transactions based upon
agreements, arrangements or understandings made by or on behalf of such
Stockholder.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
Section 3.1 Authority. The execution, delivery and performance by the
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Company of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms. The execution of and performance of
the transactions contemplated by this Agreement and compliance with its
provisions by the Company will not violate any provision of law and will not
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or require a consent or waiver
under, its Certificate of Incorporation or By-Laws (each as amended to date) or
any indenture, lease, agreement or other instrument to which the Company is a
party or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to the Company.
Section 3.2 Capitalization. The authorized capital stock of the Company
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(immediately prior to the Closing) consists of 5,000,000 shares of common stock,
$0.01 par value per share (the "Common Stock"), of which 1,146,196 shares are
issued and outstanding, and 1,000,000 shares of Preferred Stock, $0.01 par value
per share, all of which 1,000,000 shares have been designated as Series A
Preferred, of which 345,722 shares are issued and outstanding. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. The total number of shares
of Common Stock that may be issued under the 1997 Stock Option Plan is 200,000,
of which 134,200 shares are issuable pursuant to outstanding stock options. No
options to be issued pursuant to the 1997 Stock Option Plan will vest or become
exercisable prior to the expiration of the Option. Except as set forth in
Exhibit B hereto, (i) no subscription, warrant, option, convertible security or
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other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the Company has
no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
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Section 3.3 Government Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, or the
transactions to be consummated at the Closing, as contemplated by this
Agreement, except such filings as shall have been made prior to and shall be
effective on and as of the Closing (except that the pre-merger notification
provisions of the HSR Act may apply).
Section 3.4 Litigation. There is no action, suit or proceeding, or
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inquiry or investigation, pending, or, to the best of the Company's knowledge,
any basis therefor or threat thereof, against the Company, which questions the
validity of this Agreement or the right of the Company to enter into it.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the Stockholders that the
Purchaser has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby (i) have been duly authorized
by the Board of Directors of the Purchaser and no other corporate action on the
part of the Purchaser is necessary to authorize the execution, delivery or
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and (ii) will not result in a
violation of any order, writ, injunction, decree, statute, rule or regulation
applicable to the Purchaser (except that the pre-merger notification
requirements of the HSR Act may apply). This Agreement has been duly executed
and delivered by the Purchaser and is a valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally.
ARTICLE V
COVENANTS OF THE STOCKHOLDERS
Each of the Stockholders hereby covenants and agrees that:
Section 5.1 No Proxies for or Encumbrances on Stockholder Shares. Except
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as provided in this Agreement, such Stockholder shall not during the term of
this Agreement, without the prior written consent of the Purchaser, directly or
indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Stockholder Shares or
(ii) sell, assign, transfer,
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encumber or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect sale,
assignment, transfer, encumbrance or other disposition of, any Shares. Such
Stockholder shall not seek or solicit any such sale, assignment, transfer,
encumbrance or other disposition or any such contract, option or other
arrangement or assignment or understanding and agrees to notify the Purchaser
promptly and to provide all details requested by the Purchaser if such
Stockholder shall be approached or solicited, directly or indirectly, by any
person with respect to any of the foregoing. Notwithstanding the foregoing, the
Purchaser hereby consents to the transfers, sales or other dispositions by
Stockholders of Stockholder Shares which have occurred between the period
beginning on May 29, 1997 and ending on the date of this Agreement and which are
reflected on the Schedule of Stockholder Shares on Schedule A hereto, and waives
any claims for breach of contract that it might have with respect to such
dispositions of Stockholder Shares made in violation of Section 5.1 of the
Option Agreement.
Section 5.2 No Shop. Such Stockholder shall not directly or indirectly
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(i) solicit, initiate or encourage (or authorize any person to solicit, initiate
or encourage) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company or any direct or indirect
subsidiary thereof, or any acquisition of a substantial equity interest in, or a
substantial amount of the assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or other
transaction or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or participate in, facilitate or encourage any effort
or attempt by any other person to do or seek any of the foregoing. Such
Stockholder shall promptly advise the Purchaser of the terms of any
communications it may receive relating to any of the foregoing.
Section 5.3 Conduct of Stockholders. Such Stockholder will not (i) take,
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agree or commit to take any action that would make any representation and
warranty of such Stockholder hereunder inaccurate in any respect as of any time
prior to the termination of this Agreement or (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees that during the term of this
Agreement, the Company shall not, without the prior written consent of the
Purchaser:
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(a) authorize or issue, or enter into any agreement for the issuance
of, any shares of any class or series of stock of the Company or any rights,
options or warrants to subscribe for, purchase or otherwise acquire Common Stock
or any capital stock or other capital stock or securities of the Company or any
evidence of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable or exercisable for Common Stock of the Company
other than (i) up to an aggregate of 200,000 shares of Common Stock issued
pursuant to the Company's 1997 Stock Option Plan as in effect on the date
hereof, (ii) shares of Series A Preferred (and shares of Common Stock of the
Company issuable upon conversion thereof) issuable pursuant to the Series A
Purchase Agreement, (iii) shares of Series A Preferred (and shares of Common
Stock of the Company issuable upon conversion thereof) issued pursuant to the
Loan and Security Agreement and (iv) the Junewicz Warrants and shares of Common
Stock issuable upon exercise of the Junewicz Warrants;
(b) grant or award any option pursuant to the 1997 Stock Option Plan
that vests or becomes exercisable prior to the expiration of the Option or
accelerate the vesting of any such option prior to the expiration of the Option;
(c) grant or award any option pursuant to the 1997 Stock Option Plan
to either of ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
(d) create, incur, assume, guarantee or become liable, contingently or
otherwise with respect to any indebtedness or obligation, other than pursuant to
the Loan and Security Agreement or in the ordinary course of business consistent
with past practice;
(e) create, incur or allow to be created or exist any lien,
encumbrance, mortgage, pledge or other security interest of any kind upon any of
its assets except (i) liens securing the obligations of the Company under the
Loan and Security Agreement, (ii) liens securing taxes or governmental charges
not yet due, or (iii) liens described on Schedule D hereto; or
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(f) enter into any agreement or arrangement relating to the patents,
patent applications, trademarks, service marks, trademark and service ▇▇▇▇
applications, trade names, copyright registrations and licenses or other product
rights necessary for the conduct of the Company's business as conducted and as
proposed to be conducted which could adversely affect the Company's ownership
interest or rights therein.
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ARTICLE VII
PURCHASER RIGHT OF FIRST REFUSAL
(a) In the event the Purchaser does not exercise the Option, then, in
such event, during the 12-month period commencing on the date of expiration of
the Option, the Company shall not enter into any agreement for the (i) sale of
all or substantially all of the capital stock of the Company, (ii) merger of the
Company with or into, or the consolidation of the Company with, any other
corporation, or any similar combination with any other corporation or (iii)
sale, lease or disposition of all or substantially all of the Company's
properties or assets (any such transaction referred to as a "Purchase
Transaction"), unless in each such case the Company shall have first complied
with this Agreement. The Company shall deliver to the Purchaser a written
notice of any proposed or intended Purchase Transaction (the "Offer"), which
Offer shall (i) identify and describe in reasonable detail the terms of the
proposed Purchase Transaction, (ii) describe in reasonable detail the price and
other terms of the proposed Purchase Transaction, (iii) identify by name the
persons or entities that will be parties to the proposed Purchase Transaction,
and (iv) offer to enter into an agreement with the Purchaser on the same terms
and conditions as the proposed Purchase Transaction. The Purchaser shall have
the right, for a period of sixty (60) days following receipt of such Offer, to
exercise its right to enter into an agreement with the Company on the same terms
and conditions specified in the Offer. The Offer by its term shall remain open
and irrevocable for such 60-day period.
(b) To accept the Offer, the Purchaser must deliver a written notice
to the Company, prior to the end of the 60-day period, setting forth its desire
to enter into an agreement with the Company at the price and upon the other
terms specified in the Offer.
(c) The obligation of the Purchaser to enter into an agreement with
the Company pursuant to the provisions of this Article VII is subject in all
cases to the preparation, execution and delivery by the Company and the
Purchaser of definitive agreements relating to such transaction reasonably
satisfactory in form and substance to the Purchaser and its counsel. Each party
agrees to negotiate diligently and in good faith to enter into such definitive
agreements.
(d) The rights of the Purchaser under this Article VII shall only
apply in the event that the proposed Purchase Transaction is related to, results
from or follows any change, modification or amendment of, or waiver of rights
under, the License Agreement of even date herewith by and between the Company
and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. All costs and expenses incurred in connection with
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this Agreement shall be paid by the party incurring such cost or expense;
provided, however, that Argo Capital's reasonable costs and expenses incurred in
connection with this Agreement shall be paid by the Company.
Section 8.2 Further Assurances. The Purchaser and the Stockholders will
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each execute and deliver or cause to be executed and delivered all further
documents and instruments and use their respective best efforts to secure such
consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby or to enable the
Purchaser and any assignee to exercise and enjoy all benefits and rights of the
Stockholders with respect to the Option and the Stockholder Shares.
Section 8.3 Additional Agreements. Subject to the terms and conditions
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of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
Section 8.4 Remedies. The parties hereto agree that the Purchaser may be
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irreparably damaged if for any reason any Stockholder fails to sell such
Stockholder's Shares (or other securities deliverable pursuant to Section 1.6)
upon exercise of the Option or to perform any of its other obligations under
this Agreement, or if the Company fails to perform any of its obligations under
Article VII of this Agreement, and that the Purchaser would not have any
adequate remedy at law for money damages in such event. Accordingly, the
Purchaser shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance of this Agreement by each
Stockholder and to enforce the performance of Article VII of this Agreement by
the Company. This provision is without prejudice to any other rights that the
Purchaser may have against any Stockholder for any failure to perform its
obligations under this Agreement. If the Purchaser breaches its obligation to
effect the purchase of the Stockholder Shares after delivery of its Exercise
Notice, subject to the terms and conditions of the Agreement and the
satisfaction of Section 1.5 hereof, the Stockholders will be entitled to pursue
usual and customary legal, equitable and other remedies.
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Section 8.5 Notices. All notices, requests, consents and other
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communications under this Agreement shall be in writing and shall be delivered
by hand, sent by fax or nationally recognized overnight courier or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchaser with a copy to ▇▇▇▇▇ ▇.
▇▇▇▇, Esq., ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
If to a Stockholder, at his address set forth on Schedule A to this
----------
Agreement or at such other address or addresses as may have been furnished in
writing by such Stockholder to the Purchaser, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇,
Esq., ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or
If to the Purchaser, at Nitinol Medical Technologies, Inc., ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as may have been
furnished to the Company and the Stockholders in writing by the Purchaser, with
a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Notices provided in accordance with this Section 8.5 shall be deemed given
(1) when received, if sent by hand, (2) when received, if sent by fax prior to
5:00 p.m. local time at the place received (otherwise on the next following
business day), (3) one business day after delivery to a nationally recognized
overnight courier service, and (4) three business days after deposit in the U.S.
mail, first class certified or registered, postage prepaid.
Section 8.6 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Stockholder Shares.
Section 8.7 Amendments; Termination. Any term of this Agreement,
-----------------------
including the allocation of the Purchase Price between cash and Purchaser Common
Stock set forth in Section 1.1, may be amended or modified and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactivity or prospectively), with the written consent of
the Purchaser, the Company and Stockholders holding at least a majority of the
Shares. Any amendment, modification or waiver effected in accordance with this
Section 8.7 shall be binding upon each Stockholder, the Company and the
Purchaser. This Agreement may be terminated upon written consent of the parties
hereto.
Section 8.8 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective
-13-
successors and assigns, provided that the Purchaser may assign its rights and
obligations to any affiliate of the Purchaser and provided, further, that no
Stockholder may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the Purchaser.
Section 8.9 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the Commonwealth of Massachusetts
without giving effect to the principles of conflicts of laws thereof.
Section 8.10 Counterparts; Effectiveness. This Agreement may be signed
---------------------------
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instruments.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 8.11 Obligations Separate. The obligations of the Stockholders
--------------------
hereunder are several and not joint.
Section 8.12 Publicity. The Company (represented by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇),
---------
on the one hand, and the Purchaser, on the other hand, will consult with each
other and obtain the prior approval of the other party before issuing any press
release or other public statements with respect to the transactions consummated
pursuant to the Purchase Agreement and any related agreements, as well as the
operations of the Company generally, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law.
* * * Remainder of page intentionally left blank * * *
-14-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PURCHASER:
NITINOL MEDICAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
COMPANY:
IMAGE TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
STOCKHOLDERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ f/b/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-15-
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
-16-
---------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇ c/o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
THE ▇▇▇▇▇ FAMILY TRUST
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇ OIL CO., INC.
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ REVOCABLE TRUST
By:
-------------------------------------
Name:
Title:
-17-
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ REVOCABLE TRUSTS
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ REVOCABLE TRUSTS
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇ PARTNERS, L.P.
By:
-------------------------------------
Name:
Title:
DELAWARE GUARANTY & TRUST,
F/B/O ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
By:
-------------------------------------
Name:
Title:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-18-
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PINOTAGE, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
JUNEWICZ & CO., INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
Marc Van Lith
ARGO CAPITAL PARTNERS I L.P.
By: Argo Funding Company L.L.C., its general
partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
Name:
Title:
-19-
Schedule A
----------
Name and Address of Number of Stockholder
Stockholder Shares/1/
-------------------- ---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 188,036
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ f/b/o 200,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 24,563
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 16,666
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 16,666
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,556
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 5,556
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------
/1/ Represents shares of Common Stock of the Company unless otherwise indicated.
-20-
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 16,668
President
Instramed Surgical
Associates, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ 25,000
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 29,249
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 25,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,571
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 3,571
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ 7,142
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,142
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 3,571
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-21-
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇ 11,071
Junewicz & Co., Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇ c/o 1,313; Warrant to
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ purchase 17,737 shares
Junewicz & Company of Common Stock/2/
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 15,000
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ Family Trust 13,888
c/o The ▇▇▇▇▇ Family Trust
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Oil Co., Inc. 12,776
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 11,250
Revocable Trust
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 3,571
Revocable Trust
[address]
---------------------
/2/ [In the event the Purchaser converts the principal amount borrowed by the
Company under the Loan and Security Agreement into additional shares of Series A
Preferred, Junewicz & Company shall be entitled to receive a warrant to purchase
a number of shares of Common Stock equal to 5% of the number of additional
shares of Series A Preferred issued to the Purchaser. If the principal amount of
the loan equals $2,000,000 and such principal amount is converted into
additional shares of Series A Preferred, Junewicz shall be entitled to receive a
warrant to purchase 27,405 shares of Common Stock of the Company.]
-22-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 3,571
Revocable Trust
[address]
▇▇▇▇▇▇ Partners, L.P. 30,063
▇▇▇▇▇▇ Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Delaware Guaranty & Trust, 15,031
f/b/o ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,500
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇
Pinotage, LLC 384,689
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Junewicz & Co., Inc. Warrant to purchase 76
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shares of Common
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇/▇/
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------
/3/ In the event the Purchaser converts the principal amount borrowed by the
Company under the Loan and Security Agreement into additional shares of Series A
Preferred, Junewicz & Company shall be entitled to receive a warrant to purchase
a number of shares of Common Stock equal to 5% of the number of additional share
of Series A Preferred issued to the Purchaser. If the principal amount of the
loan equals $2,000,000 and such principal amount is converted into additional
shares of Series A Preferrred, Junewicz shall be entitled to receive a warrant
to purchase 27,405 shares of Common Stock of the Company.
-23-
Marc Van Lith Warrants to purchase
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 10,735 shares of
Apt. 5(f) Common Stock.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Argo Capital Partners I L.P. 120,361/4/
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Total: 1,266,557 shares of
Common Stock and
warrants to purchase
28,548 shares of
Common Stock.
---------------
/4/ Refers to Shares subject to adjustment pursuant to (S) 1.2 of the
Purchase Agreement.
-24-
Schedule B
----------
Summary of Outstanding and Pro Forma Common and
Series A Preferred Stock and Warrants and Other
Convertible Securities to Acquire Common Stock of
Image Technologies Corporation
Total Common Pro Forma
No. Shares/ Cert No. and Common Diluted
Recordholder Warrants Price/Share (C-) Equivalent Shares Ownership %
---------------------------------------------------------------------------------------------------------------------------
Common Stock:
Pinotage, LLC 384,689 -- 55 384,689 22.63
▇▇▇▇ ▇▇▇▇▇▇ F/B/O and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 224,563 $1.00 3; 37 224,563 13.21
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 188,036 -- 54 188,036 11.06
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 50,000 3.19 7 50,000 2.94
Delaware, Guaranty &
Trust F/B/O ▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇; ▇▇▇▇▇▇
Partners L.P. 45,094 6.65 19; 20 45,094 2.65
▇▇▇▇▇▇, ▇▇▇▇▇ 29,249 -- 34; 47 29,249 1.72
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
& ▇▇▇▇▇ 25,000 3.19 11 25,000 1.47
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇. 25,000 3.19 13 25,000 1.47
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 16,668 3.19 10 16,668 0.98
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 16,666 3.19 5 16,666 0.98
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 16,666 3.19 6 16,666 0.98
▇▇▇▇▇, ▇▇▇▇▇ 15,000 -- 24; 30; 35 15,000 0.88
Denver Family Trust 13,888 18.00 52; 53 13,888 0.82
▇▇▇▇▇▇▇▇▇ Oil Co., Inc. 12,776 18.00 50; 51 12,776 0.75
21; 25; 28;
31; 33; 36
Junewicz, J. ▇▇▇▇ and c/o
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. 12,384 -- 31; 33; 36 12,384 0.73
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
Revocable Trust 11,250 -- 27; 32 11,250 0.66
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 10,571 7.00 14 10,571 0.62
▇▇▇▇▇ Revocable Trusts 7,142 -- 38; 39 7,142 0.42
▇▇▇▇▇▇, ▇▇▇▇▇▇ 7,142 7.00 16 7,142 0.42
▇▇▇▇▇▇▇, ▇▇▇▇ 7,142 7.00 17 7,142 0.42
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. 5,556 3.19 8 5,556 0.33
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 5,556 3.19 9 5,556 0.33
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 5,000 -- 43; 45 5,000 0.29
▇▇▇▇▇▇, ▇▇▇▇ 3,571 7.00 15 3,571 0.21
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ 3,571 7.00 18 3,571 0.21
Nitinol Medical
Technologies, Inc. 1,516 -- 48 1,516 0.09
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 1,500 -- 40 1,500 0.09
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 1,000 -- 46 1,000 0.06
Argo Capital Partners I
L.P. (1) 120,361 9.97 120,361 7.08
Series A Preferred:
Nitinol Medical
Technologies, Inc. (2) 384,881 6.65 P-1; P-2 384,881 22.64
Warrants and Other
Convertible Securities:
Junewicz, J. ▇▇▇▇ c/o
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇.
and Junewicz & Co. (3) 17,813 6.65 J-1; J-1A 17,813 1.05
Van Lith, ▇▇▇▇ 10,735 11.55 W-3 10,735 0.63
Nitinol Note No. 3 and
Series A Preferred Stock
Purchase Warrant -- 9.97 NMT-1 20,060 1.18
------ ----
Total Common and
Common Equivalent
Shares 1,700,046 100.00%
========= =======
------------------
(1) Subject to adjustment pursuant to Section 1.2 of this Agreement.
(2) Subject to adjustment pursuant to Section 1.2 of this Agreement. In
addition, Nitinol may at its option convert into shares of Series A
Preferred the principal amount outstanding, aggregating $2,150,000,
pursuant to a Loan and Security Agreement dated May 29,1997, as amended
by Amendment No. 1 to Loan and Security Agreement dated December 30,
1998 and Amendment No. 2 to Loan and Security Agreement dated
February 3, 1999.
(3) In the event Nitinol converts the principal amount borrowed by the
Company under the Loan and Security Agreement into additional shares of
Series A Preferred, Junewicz & Company shall be entitled to receive a
warrant to purchase a number of shares of Common Stock equal to 5% of
the number of additional shares of Series A Preferred issued to Nitinol.
If the principal amount of the Loan equals $2,000,000 and such principal
amount is converted into additional shares of Series A Preferred,
Junewicz shall be entitled to receive a warrant to purchase 27,405
shares of Common Stock of the Company.
Summary of Nitinol Common Share Equivalents
-------------------------------------------
Common Stock issued 3/10/98 1,516
Series A Preferred issued 5/27/97 345,722
Series A Preferred issued at Closing 39,159
Common Stock issuable upon conversion of
Nitinol Note No. 3 and related Series A
Preferred Stock Purchase Warrant 20,060
-------
406,457*
=======
Summary of Outstanding Stock Options
------------------------------------
Exercise
Employee Options Price
-------- ------- --------
▇▇▇▇▇ ▇. Lemci, R & D Manager 12,000 $6.65
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, Mechanical Engineer 4,500 6.65
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Electrical Engineer 3,000 6.65
Ranga Krishnamarthl, Software Engineer 4,000 6.65
▇▇▇▇ ▇▇▇▇▇▇, Quality Manager 3,000 6.65
▇▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer 50,000 6.65
▇▇▇▇▇▇▇ ▇▇▇▇▇, Director 2,000 6.65
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Director 2,000 6.65
▇▇▇▇▇ ▇. ▇▇▇▇▇, Electrical Technician 2,000 6.65
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Director Sales & Marketing 20,000 6.65
10,000/1/
▇▇▇▇ ▇▇▇▇ 1,700 6.65
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Sales 20,000 6.65
-------
Total 122,500
-------------------
/1/ If sales forecast is achieved.
* Equal to 23.91% of total Common and Common Equivalent Shares.
-25-
Schedule C
----------
JUNEWICZ & CO., INC.
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
May 23, 1997
Image Technologies Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. R. ▇▇▇ ▇▇▇▇▇▇▇▇
President and CEO
Gentlemen:
This letter agreement (the "Agreement") will confirm the arrangement
under which Junewicz & Co., Inc. ("Junewicz") has been engaged by Image
Technologies Corporation (the "Company") to act as its exclusive financial
advisor in connection with the transactions being contemplated with Nitinol
Medical Technologies, Inc. ("Nitinol").
As the Company's financial advisor, Junewicz has introduced the Company
and other investors to Nitinol and has assisted the Company in structuring and
negotiating the transactions being contemplated with Nitinol.
The Company and Junewicz further agree as follows:
1. Transactions Contemplated with Nitinol
--------------------------------------
The transactions being contemplated between the Company, R. ▇▇▇
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and Nitinol, ▇▇▇▇▇▇
Capital Management and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, "▇▇▇▇▇▇") are as
follows:
At the first closing, the following transactions will occur:
a) Nitinol will purchase $2.3 million of Series A Preferred Stock
("Preferred Stock") from the Company ("Transaction 1a");
b) ▇▇▇▇▇▇ will purchase $300,000 of Common Stock ("Common Stock")
from the Company ("Transaction 1b"); and
-26-
Image Technologies Corporation
May 23, 1997
Page 2
c) The Company will purchase $300,000 of Common Stock from ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ("Transaction 1c").
Subsequent to the first closing, the following transactions may occur:
d) Nitinol will provide a credit line to the Company of up to $2.0
million of senior debt (the "Revolving Credit Loan"). Nitinol
will have the right to convert all or any portion of the amount
drawn down under the Revolving Credit Line into additional shares
of Preferred Stock of the Company. Nitinol may also, at any time
during the Option Period (defined as the period during which
Nitinol may exercise its option to purchase all of the
outstanding capital stock of the Company pursuant to the
Stockholders Option Agreement (the "Purchase Option")), convert
all or any portion of any undrawn amounts under the Revolving
Credit Loan into additional shares of Preferred Stock of the
Company ("Transaction 1d").
e) Nitinol will have the option to purchase all remaining shares of
the Company for an additional $24.5 million at any time during
the Option Period ("Transaction 1e").
2. Fees and Expenses
-----------------
In consideration for its services hereunder, Junewicz shall receive
7,500 shares of the Company's Common Stock as a retainer payment. Such shares
shall be issued on or before the closing of Transactions 1a, 1b and 1c. In
addition, Junewicz shall be entitled to receive the following indicated
compensation from the indicated obligators at the closing of the respective
transactions:
a) The Company shall pay to Junewicz a cash fee equal to 5% of the
gross proceeds of any sale of Preferred Stock by the Company to
Nitinol. In addition, the Company shall issue to Junewicz an
amount of warrants equal to 5% of the number of shares of
Preferred Stock sold by the Company to Nitinol, less the number
of shares of Common Stock redeemed by the Company from ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ in Transaction 1c. (Transactions 1a and 1d).
b) The Company shall pay to Junewicz a cash fee equal to 6% of the
gross proceeds of any sale of Common Stock by the Company to
▇▇▇▇▇▇ or other investors originated by Junewicz. In addition,
the Company shall issue to Junewicz an amount of warrants equal
to 6% of the number of
Image Technologies Corporation
May 23, 1997
Page 3
shares of Common Stock sold by the Company to ▇▇▇▇▇▇ or other
investors originated by Junewicz. (Transaction 1b)
c) If Nitinol purchases the remaining shares of the Company, the
Company agrees to pay Junewicz an additional cash transaction fee
equal to 2.0% of the Aggregate Consideration paid to the
Company's shareholders up to $25 million, and 1.5% of the
Aggregate Consideration on the portion greater than $25 million.
(Transaction 1e)
The warrants (to purchase Common Stock) issued to Junewicz under
Transactions 1a, 1b and 1d shall have an exercise price equal to the price paid
for the Preferred Stock or Common Stock by Nitinol, ▇▇▇▇▇▇ or other investors
originated by Junewicz and shall be exercisable at any time for a period of five
years from the date of the respective transactions. In the event of (i) an
initial public offering by the Company, or (ii) a reorganization, merger or sale
of the Company, the Company shall permit the "cashless exercise" of any warrants
granted to Junewicz in this Paragraph (i.e., the exercise of the warrants
without payment of the exercise price in cash with the result that Junewicz
receives upon exercise cash representing the difference between the exercise
price of the warrants and the initial public offering or sale price of the
Common Stock without requiring Junewicz to pay the exercise price in cash).
For purposes of this agreement, the term "Aggregate Consideration"
shall mean the total fair market value (on the date of payment) of all
consideration (including cash, securities, property, all remaining debt on the
Company's financial statements and other indebtedness and obligations assumed by
Nitinol and any other form of consideration) paid or payable, or otherwise
distributed, directly or indirectly, to the Company or its security holders in
connection with Transaction 1e. In addition to the foregoing compensation, the
Company shall reimburse Junewicz, promptly upon request, for its reasonable
out-of-pocket expenses, which may include fees and disbursements of its legal
counsel.
3. Indemnification
---------------
The Company jointly and severally agree to indemnify Junewicz in
accordance with the indemnification provisions (the "Indemnification
Provisions") as set forth in Annex A to this Agreement, which is incorporated by
reference into this Agreement.
Image Technologies Corporation
May 23, 1997
Page 4
4. Prior Representation of Nitinol by Junewicz
-------------------------------------------
The Company has been advised that Junewicz has performed investment
banking services for Nitinol within the past two years and has a continuing
personal and business relationship with Nitinol, its executive officers and ▇.▇.
▇▇▇▇▇▇▇ & Co., a major shareholder of Nitinol. In addition, the Company was
advised after the engagement of Junewicz but before the execution of any
definitive agreements relating to the transactions discussed herein that
Junewicz holds 99,660 warrants in Nitinol. The Company hereby expressly consents
to Junewicz's representation of the Company notwithstanding the information set
forth in this Paragraph. In particular, the information that is set forth in
this Paragraph shall not constitute gross negligence or willful misconduct by
Junewicz within the meaning set forth in Annex A.
5. Governing Law and Other Matters
-------------------------------
This agreement shall be governed by and construed in accordance with
the Laws of the State of New York without regard to the conflict of laws
principles thereof.
Neither this Agreement nor any written advice (written or oral)
rendered by Junewicz in connection with this Agreement may be disclosed to any
third party or circulated or referred to publicly without the prior written
consent of Junewicz.
Please confirm that the foregoing is in accordance with your
understanding by signing and returning the enclosed duplicate copy of this
Agreement, which shall thereupon constitute a binding agreement as of the date
set forth above.
Very truly yours,
JUNEWICZ & CO., INC.
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Confirmed and Agreed to this 23 day of May, 1997:
IMAGE TECHNOLOGIES CORPORATION
By: /s/ R. ▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
R. ▇▇▇ ▇▇▇▇▇▇▇▇
President & Chief Executive Officer
Image Technologies Corporation
May 23, 1997
Page 5
Annex A
In the event that Junewicz becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person, including
stockholders of the Company, in connection with any matter referred to in this
Agreement, the Company periodically will reimburse Junewicz for its legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith. The Company also will indemnify and hold
harmless against any losses, claims, damages, expenses or liabilities to any
such person in connection with any matter referred to in this Agreement, except
to the extent that any loss, claim, damage or liability is judicially determined
to have resulted primarily from the gross negligence or willful misconduct of
Junewicz in performing the services that are the subject of this Agreement. If
for any reason the foregoing indemnification is unavailable to Junewicz or
insufficient to hold it harmless, then the Company shall contribute to the
amount paid or payable by Junewicz as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative benefits
of the Company and the other stockholders on one hand and Junewicz on the other
hand in the matters contemplated by this Agreement, as well as the relative
fault of the Company on the one hand and Junewicz on the other hand with respect
to such loss, claim, damage or liability and any other relevant equitable
considerations. The reimbursement, indemnity and contribution obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, including, without limitation, any liability which
the Company may have to Junewicz pursuant to the Agreement and shall extend upon
the same terms and conditions to the controlling person of Junewicz, and shall
be binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, Junewicz, any such affiliate and any
such person. The Company also agrees that neither Junewicz nor its control
person shall have any liability to the Company or the stockholders of the
Company for or in connection with any matter referred to in this Agreement
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company are judicially determined to have resulted primarily
from the gross negligence or willful misconduct of Junewicz in performing the
services that are subject to this Agreement. The foregoing provisions shall
survive any termination or completion of the engagement provided by this
Agreement and this Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflict of laws
principles thereof. The Company agrees that they will not settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder unless such settlement, compromise or consent includes an
unconditional release of
Image Technologies Corporation
May 23, 1997
Page 6
Junewicz and the controlling person of Junewicz from all liability arising out
of such claim, action, suit or proceeding.
Schedule D
----------
NONE, except for $102,808.00 due at the closing to individual lenders, including
$15,000.00 due to ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇.
-27-