EXHIBIT 10.3
SERIES A SUBORDINATED PROMISSORY NOTE
(UNSECURED)
$++ ++, California
"Note Date": ++, 1996
FOR VALUE RECEIVED, INSIGHT IMAGING SYSTEMS, INC., a California corporation
("Borrower" or "Insight") promises to pay to ++ ("Payee") at ++, or such other
place as Payee may designate from time to time by written notice to Borrower, in
lawful money of the United States, the principal sum of ++ ($++) with interest
at the rate of ten percent (10.0%) per annum.
1. PAYMENTS.
1.1 Commencing on June 30, 1996 and on each September 30, December
31, March 31 and June 30 thereafter until this Note has been paid in full,
payments of interest only shall be payable.
1.2 On May 17, 1998, a principal only payment in the amount of 44% of
the principal sum shall be payable.
1.3 If not sooner paid, the entire unpaid principal balance, together
with any accrued and unpaid interest shall be due and payable on May 17, 1999
("MATURITY DATE").
2. SUBORDINATION CLAUSES.
2.1 SENIOR DEBT. This note shall be subordinate to up to $8 million
of amounts identified by Borrower ("Senior Debt") owing under loans to Borrower
(including loans currently in place or hereafter arising and in whatever amount
whether such future loans are in a total amount which is more or less than the
amounts owing under loans existing on the date hereof), whether secured or
unsecured, including amounts owing under Borrower's equipment leases (including
leases currently in place or hereafter arising in whatever amount whether such
future lease payment obligations are in a total amount which is more or less
than the lease payment obligations owing on the date hereof). For this purpose
"loan" shall include any cash advance and the face amount of any letter of
credit issued for the account of Borrower. In the event of liquidation of the
Borrower, Payee will not be entitled to payment until such Senior Debt has been
paid in full. In the event Borrower is acquired and becomes a wholly-owned
subsidiary of another person or entity ("acquiror") or all of its assets are
sold and its obligations assumed by another person or entity ("transferee"),
Payee agrees that the acquiror or transferee, as the case may be, shall have the
benefit of this Agreement and Senior Debt shall thereupon be amended to include
all loans (as defined herein) to the acquiror or transferee, as the case may be,
whether secured or unsecured, including amounts owing under equipment leases
with the same effect as if such loan
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or equipment lease had been made to Borrower as such are identified as Senior
Debt by Borrower. In the event of such an acquisition or transfer, the
combination of Insight and the acquiror or transferee, as the case may be, is
referred to as the "Combined Companies."
2.2 AUTOMATIC EXTENSION OF INTEREST AND PRINCIPAL PAYMENTS DUE DATES
UNDER CERTAIN CIRCUMSTANCES. No interest or principal payment shall be paid
under this Note or any other Series A Subordinated Note of Borrower ("Series A
Note") to the extent that Borrower and/or the Combined Companies, as the case
may be, is or are in default under any of the Senior Debt or if, on the date
such interest or principal payment is due after taking into account such
principal payment, there will be less than Two Hundred Fifty Thousand
($250,000.00) of "Borrowing Availability" under the principle credit facility
for Borrower or the Combined Companies, as the case may be. For this purpose,
Borrowing Availability means the amount which Borrower or the Combined
Companies, as the case may be, is eligible to borrow under its or their
principle revolving credit facility after deducting from total availability
under such facility the total of (a) the advances made thereunder plus (b) the
amounts of any letters of credit issued for the account of Borrower or the
Combined Companies, as the case may be. If any interest or principal payment
due under this Note, or portion thereof, is not permitted to be made pursuant to
this Paragraph 2, the due date for such interest or principal payment, or
portion thereof, shall be extended until the date upon which there is at least
Two Hundred Fifty Thousand ($250,000.00) of Borrowing Availability (both before
and after such payment, or portion thereof, is made).
2.3 AGREEMENT TO ENTER INTO WRITTEN SUBORDINATION AGREEMENT WITH
HOLDERS OF SENIOR DEBT. Payee agrees to enter into such written subordination
agreements as any holder of Senior Debt shall reasonably request; and to confirm
the subordinated status of amounts owing under this Note from time to time as
holders of Senior Debt may reasonably require.
3. SERIES A NOTES. This Note is one of a series of Insight subordinated
unsecured notes aggregating up to $850,000 which are denominated Series A
Subordinated Notes ("Series A Notes"). Insight represents that except for the
principal sum and the payee, all Series A Notes have identical terms. Insight
covenants with payee that any payment on this Note of less than the full amount
then due will be pro rata to amounts paid on all Series A Notes based on the
principal amounts owing.
4. APPLICATION OF PAYMENTS. All payments received shall be applied first
to accrued interest then due, then to principal.
5. NO ASSIGNMENT. Payee shall not assign this Note.
6. WAIVERS. Borrower waives diligence, presentment, protest and demand
and also notice of protest, demand, dishonor and nonpayment of this Note, and
expressly agrees that this Note, or any payment hereunder may be extended from
time to time, all without in anyway affecting the liability of Borrower. The
right to plead any and all statutes of limitations as a defense to any demand on
this Note or any and all obligations or liabilities arising out of or in
connection with this Note is expressly waived by Borrower to the fullest extent
permitted by law.
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No extension of the time for the payment of this Note, or any installment
hereof, made by agreement by Payee with any person now or hereafter liable for
the payment of this Note shall affect the original liability under the terms of
this Note by Borrower even if Borrower is not a party to such agreement.
7. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California.
EXECUTED as of the Note Date.
BORROWER:
Insight Imaging Systems, Inc.,
a California corporation
By:
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Mark Stevens, President
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