SECURED CONVERTIBLE WORKING CAPITAL PROMISSORY NOTE
Sacramento, California $1,500,000
________ __, 2000
1. Terms of Payment. FOR VALUE RECEIVED, Ophthalmic Imaging Systems, a
California corporation ("OIS"), promises to pay to the order of MediVision
Medical Imaging Ltd., or any other holder of this Note ("MediVision"), at such
place as MediVision may designate in writing, the lesser of: (a) the principal
sum of one million five hundred thousand ($1,500,000) (the "Line of Credit"), or
(b) the aggregate unpaid principal sum of all revolving credit loans (each, a
"Loan" and, collectively, the "Loans") made to OIS, at its request and in its
sole discretion, up to $1,500,000, under this Secured Convertible Working
Capital Promissory Note (this "Note") from time to time. Within the limits of
the Line of Credit, and subject to the terms and conditions hereof, OIS may
borrow, repay, prepay and reborrow the Loans under this Note.
2. Interest.
(a) OIS will pay interest on the unpaid principal amount hereof from
time to time outstanding, computed on the basis of a 365-day year and actual
days elapsed, at a rate of 9.3% per annum.
(b) OIS will pay interest, at the rate described above, monthly in
arrears on the first day of each month in each year, commencing ___________,
2000, at maturity (whether by acceleration or otherwise) and upon the making of
any prepayment, as hereinafter provided. In no event shall interest exceed the
maximum legal rate permitted by law. All payments, including insufficient
payments, shall be credited, regardless of their designation by OIS, first to
outstanding late fees and any charges and expenses, then to accrued and unpaid
interest and the remainder, if any, to unpaid principal hereunder.
3. Revolving Loan Period. Subject to compliance with the terms hereof,
OIS may borrow, repay and reborrow the Loans for a period of thirty-six (36)
months commencing on the date hereof (the "Revolving Credit Period").
4. Repayment of Principal. All amounts outstanding hereunder shall be
due and payable on ___________, 2003 (the "Maturity Date"), unless payable
earlier in accordance with the terms of this Note. This Note may be prepaid (in
whole or in part) at any time, without any prepayment penalty or premium
therefor at the option of OIS in its sole and absolute discretion.
5. Security Interest In Certain Property. All Property (as defined
below) shall be subject to a security interest in favor of MediVision as
security for any and all Liabilities (as defined below) and as security for such
Liabilities, OIS hereby grants to MediVision a continuing perfected interest on
and security interest in, and hereby pledges and assigns to MediVision all of
OIS' right title and interest, whether now owned or hereafter acquired,
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howsoever arising, in and to the Property. The term "Property" shall mean all of
the assets and properties of the OIS, including, without limitation, the
following:
(a) any and all accounts receivable of the OIS, which shall include
all accounts and other rights to receive payments for goods and other products
sold or leased or for services rendered, whether or not earned by performance,
recognized by the referenced person or recorded on its books and records, and
irrespective of whether any may be characterized as accounts, chattel paper,
choses-in-action, contract rights, general intangibles, instruments, invoices,
notes or otherwise in any document, by any person or under any applicable law;
(b) any and all inventory of the OIS, wherever located, including
any and all raw materials, work-in-progress and finished goods;
(c) any and all tangible personal assets and properties of the OIS,
wherever located, including (without limitation) any and all accessions,
accessories, additions, equipment, fixtures, furnishings, goods, inventory,
machinery, materials, parts, replacements, supplies, tools and vehicles, whether
or not located upon or affixed to any of the foregoing; and
(d) any and all accounts, instruments, chattel paper, documents of
title and trust receipts (and the goods covered thereby, wherever located),
contract rights, warranties, casualty and other insurance policies and rights,
litigation claims and rights, tradenames and other general intangibles of the
OIS, and any and all computer programming data and other books and records of
the OIS;
in each case whether now existing or hereafter acquired or created, together
with the products and proceeds thereof, all collections, payments and other
distributions and realizations with respect thereto, any and all other rights,
powers, privileges, remedies and interests of the OIS therein, thereto or
thereunder, and any and all renewals, substitutions, modifications and
extensions of any and all of the foregoing subsections.
The term "Liabilities" shall mean the indebtedness evidenced by this Note and
all other indebtedness and obligations of any kind of OIS to (a) MediVision, (b)
any group of which MediVision is a member, or (c) any other person if MediVision
has a participation or other interest in such indebtedness, liabilities or
obligations, whether (i) for MediVision's own account or as agent for others,
(ii) acquired directly or indirectly by MediVision from OIS or others, (iii)
absolute or contingent, joint or several, secured or unsecured, liquidated or
unliquidated, due or not due, contractual or tortious, now existing or hereafter
arising, or (iv) incurred by OIS as principal, surety, endorser, guarantor or
otherwise, and including without limitation all expenses, including attorneys'
fees and disbursements, incurred by MediVision in connection with any such
indebtedness, liabilities, or obligations or any of the Property (including any
sale or other disposition of the Property).
6. Conversion into OIS Common Stock.
(a) The MediVision shall have the right from and after the date of
issuance of this Note and then at any time on or prior to the Maturity Date, and
until this Note is fully paid, to convert any outstanding and unpaid principal
portion of this Note and, at the MediVision's election, the accrued and unpaid
interest thereon (the date of delivery to OIS of a notice
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requesting conversion being a "Conversion Date") into fully paid and
nonassessable shares of Common Stock, without par value, of OIS ("OIS Common
Stock") as such stock exists on the date of issuance of this Note, or any shares
of capital stock of OIS into which such stock shall hereafter be changed or
reclassified (the "OIS Common Stock") at the conversion price as defined in
Section 6(b) hereof (the "Conversion Price"), determined as provided herein.
Upon the delivery of this Note to OIS, accompanied, preceded or followed by
notice from the MediVision to OIS of the MediVision's written request for
conversion, OIS shall issue and deliver to the MediVision within ten (10)
business days from the Conversion Date that number of shares of OIS Common Stock
for the portion of the Note and interest converted in accordance with the
foregoing and a new Note in the form hereof for the balance of the principal
amount hereof, and/or interest if any. The number of shares of OIS Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal of and interest on the Note to be converted by the
Conversion Price.
(b) The Conversion Price per share shall be $0.80.
(c) The Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to Sections 6(a) and
6(b), shall be subject to adjustment from time to time upon the happening of
certain events while this conversion right remains outstanding, as follows:
A. Merger, Sale of Assets, etc. If OIS at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, the Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
B. Reclassification, etc. If OIS at any time shall, by
reclassification or otherwise, change the OIS Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase such number and kind of securities
as would have been issuable as the result of such change with respect to the OIS
Common Stock immediately prior to such reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares of OIS
Common Stock are subdivided or combined into a greater or smaller number of
shares of OIS Common Stock, or if a dividend is paid on the OIS Common Stock in
shares of OIS Common Stock, the Conversion Price shall be proportionately
reduced in case of subdivision of shares or stock dividend or proportionately
increased in the case of combination of shares, in each such case by the ratio
which the total number of shares of OIS Common Stock outstanding immediately
after such event bears to the total number of shares of OIS Common Stock
outstanding
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immediately prior to such event.
(d) During the period the conversion right exists, OIS will reserve
from its authorized and unissued OIS Common Stock a sufficient number of shares
to provide for the issuance of OIS Common Stock upon the full conversion of this
Note. OIS represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. OIS agrees that its issuance of this Note
shall constitute full authority to its officers, agents, and transfer agents who
are charged with the duty of executing and issuing stock certificates to execute
and issue the necessary certificates for shares of OIS Common Stock upon the
conversion of this Note.
(e) OIS shall give not less than ten (10) days' prior written notice
to the MediVision of any change in the Conversion Price under this Note and the
method of calculation thereof.
(f) OIS will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by OIS but will at all times in good faith assist in the
carrying out of all the provisions of this Agreement and in the taking of all
such actions as may be necessary or appropriate in order to protect the
conversion rights of the MediVision.
7. Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of California, without regard to its
rules on conflicts of laws or choice of law.
8. Notices, Etc. All notices and other communications provided for
under this Note shall be in writing (including facsimile transmissions) and
deemed properly give (i) if delivered in person, (ii) if sent by
nationally-recognized overnight delivery service, (iii) in the event overnight
delivery services are not readily available, if mailed by first-class United
States mail, postage prepaid, registered or certificated with return receipt
requested, or (iv) if sent by facsimile with receipt of answer-back or
confirmation. Notice that is mailed shall be effective upon the expiration of
five (5) business days after its deposit. Notice given in any other manner shall
be effective upon receipt by the addressee. The address for such notices and
communications shall be as follows:
If to the Company: Ophthalmic Imaging Systems
221 Lathrop Way, Suite I
Sacramento, CA 95815
Attention: President
Facsimile No. (916) 646-0207
Telephone No. (916) 646-2020
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With a copy to: Gibson, Dunn & Crutcher, LLP
1530 Page Mill Road
Palo Alto, CA 94304
Attention: Lawrence Calof, Esq.
Facsimile No. (650) 849-5333
Telephone No. (650) 849-5300
If to the MediVision: MediVision Medical Imaging Ltd.
P.O. Box 45
Industrial Park
Yokneam Elit
20692 Israel
With a copy to: Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Henry I. Rothman, Esq.
Tel. No.: (212) 704-6000
Fax No.: (212) 704-6288
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
9. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10. Successors and Assigns. This Note shall not be assignable by OIS
without the prior written consent of the MediVision. This Note shall be binding
upon OIS and its successors and permitted assigns and the terms hereof shall
inure to the benefit of MediVision and its successors and assigns, including
subsequent holders hereof.
11. Entire Agreement. This Note sets forth the entire agreement of OIS
and MediVision with respect to this Note and may be modified only by a written
instrument executed by OIS and MediVision.
12. Headings. The headings herein are for convenience only and shall
not limit or define the meaning of the provisions of this Note.
OPHTHALMIC IMAGING SYSTEMS
By:
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Name:
Title:
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