Exhibit 10.19(i)
IMPERIAL BANK
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000 (415) 233-3000
August 28, 1997
OPHTHALMIC IMAGING SYSTEMS
000 Xxxxxxx Xxx, Xxxxx X
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxx, President
Xx. Xxxxxx X. Xxxxxxx, Director of Finance
Re: Imperial Bank Loan No. 700000559
Gentlemen:
With reference to the Credit Terms and Conditions ("CTC") dated April 12,
1995 with addendum dated April 10, 1995 between Imperial Bank ("Bank") and
Ophthalmic Imaging Systems ("Borrower"), the Bank hereby modifies the
following numbered terms and conditions of the addendum attached to the CTC
(hereinafter referred to as the "Addendum"):
1. Paragraph 2 of the Addendum, as previously modified, is deleted in its
entirety and is replaced with the following:
"2. TERM AND REPAYMENT
The line of credit will require monthly payments of interest
through and including October 5, 1997, at which time all
outstanding principal, accrued but unpaid interest and other
charges thereinafter shall be due and payable in full."
2. Paragraph 3 of the Addendum, is deleted in its entirety and is
replaced with the following:
"3. BORROWING BASE
Advances will be limited to the lesser of: (i) 70% of Eligible
Accounts (as hereinafter defined); or (ii) $750,000. As used
herein, "Eligible Accounts" shall only include such accounts as
Bank in its sole discretion shall from time to time determine are
eligible. Eligible Accounts shall also not include any of the
following:
a. Accounts with respect to which the account debtor is an
officer, director, shareholder, employee, subsidiary or
affiliate of Borrower.
b. Accounts due from a customer if more than twenty-five
percent (25%) or more of the aggregate amount of accounts of
such customer have at that time remained unpaid for more
than ninety (90) days from the invoice date. (CROSS AGE)
Ophthalmic Imaging Systems
August 28, 1997
Page 2 of 4
c. Accounts representing xxxxxxxx for service or maintenance
contracts or for inventory or equipment on rent to the
account debtor.
d. Accounts with respect to international transactions unless
insured or covered by a letter of credit in a manner and
form acceptable to the Bank.
e. Salesman's accounts for promotional purposes.
f. The amount by which any one account exceeds fifteen percent
(15%) of the total accounts receivable balance.
(CONCENTRATION)
g. Accounts where the account debtor is a seller to borrower,
to the extent that a potential offset exists. (CONTRA)
h. Accounts due from customers that remain unpaid after ninety
(90) days from the invoice date.
i. United States government accounts unless properly
documented."
3. Paragraph 5 of the Addendum, as previously modified, is deleted in its
entirety and is replaced with the following:
"5. PRICING
Interest Rate: Bank's Prime Rate + 3% per annum. Rate shall
be reduced to Bank's Prime Rate + 2% per
annum following the achievement of two
consecutive fiscal quarters of operating and
after-tax profitability in excess of $100,000
each.
Facility Fee: $1,875
4. Sub-section B of Paragraph 6 of the Addendum is deleted in its
entirety and is replaced with the following:
"B. Borrower to provide to Bank:
1) Unqualified audited financial statements within 90 days
after each fiscal year end.
2) Company prepared monthly financial statements and Compliance
Certificate within 25 days after the end of each month.
3) Borrower to provide Bank with agings of accounts receivable
and accounts payable, along with a Borrowing Base
Certificate, Bank forms AC1-AR and Inventory Transaction
Report; AC11-Computation of Ineligible AR; and AC12-Monthly
AR Reconciliation upon such a schedule as determined by Bank
in Bank's sole discretion. All customer collections (wire
transfer, checks, cash) shall be applied to the outstanding
loan balance, and such collections shall
Ophthalmic Imaging Systems
August 28, 1997
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reduce the gross AR availability as calculated on the
Borrowing Base Certificate by the amounts collected. New
invoices during the same period shall increase the gross A/R
availability as calculated on the Borrowing Base Certificate
by the amounts involved.
4) Budgets, sales projections, operating plan, or other
financial exhibits which Bank may reasonably request.
In addition to the modifications above, Borrower shall be subject to the
following additional conditions:
1. Concurrently with execution hereof, Borrower shall pay Bank the
$7,375.80 in fees that are due to the Bank per the Invoice dated May
5, 1997 (these are in addition to the "Facility Fee" in Paragraph 3
above).
2. Bank and Borrower agree that Borrower is subject to following
obligations under the stock appreciation right set forth in Section
1.3 of the Warrant to Purchase Stock issued November 1, 1995 ("SAR"):
A. The principal amount due from Borrower to Bank under the SAR
is $219,750.00, which represents the spread between the
closing price of Borrower's stock on Friday May 24, 1996
($6.125) and the exercise price per the Warrant to Purchase
Stock ($1.73) multiplied by 50,000 warrant shares (reduced
from 67,500 pursuant to the occurrence of certain events
stipulated in the letter agreement dated November 1, 1995).
Interest due on the principal balance is accruing at the
Bank's prime rate and has been accruing from the exercise
date of the SAR which was May 28, 1996. (Principal and
accrued interest due on the SAR shall hereinafter be
referred to as the "SAR Balance").
B. Borrower shall pay to Bank the SAR Balance as detailed in
the following schedule:
1. Within 5 days after the receipt of any new equity or
subordinated debt up to $300,000, Borrower shall apply
20% of such equity or subordinated debt amounts to the
SAR Balance. Within 5 days after the receipt of any
new equity for amounts in excess of $300,000, Borrower
shall apply 30% of such equity amounts to the remaining
SAR Balance. In any event, the SAR Balance shall be
due and payable in full November 30, 1997.
3. Borrower shall provide Bank with a revised annual forecast by
September 30, 1997.
Ophthalmic Imaging Systems
August 28, 1997
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Except for the above-described modifications, the Addendum shall remain
unaltered and in full force and effect.
Please acknowledge your approval by signing and returning the original of
this letter to me.
Sincerely,
XXXXXX X. XXXXXXXXX
Xxxxxx X. Xxxxxxxxx
Assistance Vice President
Special Markets Group
Accepted and agreed to:
OPHTHALMIC IMAGING SYSTEMS
By: XXXXXX X. XXXXXXXXX
Title: Chief Executive Officer
Date: September 19, 1997
