1
Exhibit 2
Conformed Copy
AMENDMENT NO. 1 dated as of September 16, 1997 between INTERNATIONAL META
SYSTEMS, INC., a corporation duly organized and validly existing under the laws
of the State of Delaware (as borrower under the Notes referred to below and as
pledgor under the Security Agreement referred to below, the "Borrower"), and
AMERSCAN PARTNERS III, LIMITED PARTNERSHIP (as lender under the Notes referred
to below and as pledgee under the Security Agreement referred to below,
together with its successors and assigns in such capacity, the "Lender").
WHEREAS, the Borrower and the Lender are parties to a Security Agreement
dated as of July 15, 1997 (as in effect on the date hereof, the "Security
Agreement"); providing, subject to the terms and conditions thereof, for the
grant by the Borrower to the Lender of security interests in the collateral
referred to therein as security for the Convertible Promissory Note dated July
15, 1997, executed and delivered by the Borrower in favor of the Lender; and
WHEREAS, the parties wish to amend the Security Agreement to provide for
the security interests covered thereby to secure the obligations of the
Borrower under the Promissory Note dated August 20, 1997 and the Convertible
Promissory Note dated September 16, 1997, each executed and delivered by the
Borrower in favor of the Lender;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms defined
in the Security Agreement are used herein as therein defined.
Section 2. Amendments. Subject to the execution and delivery by the
parties hereto of this Amendment No. 1, but with effect on and after the date
hereof, the Security Agreement shall be amended as follows:
(a) The preamble of the Security Agreement shall be amended and restated
in its entirety to read as follows:
"SECURITY AGREEMENT dated as of July 15, 1997 (this "Agreement")
between INTERNATIONAL META SYSTEMS, INC., a corporation organized and
existing under the laws of the State of Delaware (as borrower under the
Notes referred to below and as pledgor hereunder, the "Borrower"), and
AMERSCAN PARTNERS III, LIMITED PARTNERSHIP (as lender under the Notes
referred to below and as pledgee hereunder, together with its successors
and assigns in such capacity, the "Lender")."
(b) The first recital of the Security Agreement shall be amended and
restated in its entirety to read as follows:
2
"WHEREAS, pursuant to the Convertible Promissory Note dated July 15,
1997, the Promissory Note dated August 20, 1997 and the Convertible
Promissory Note dated September 16, 1997 (as amended, supplemented or
otherwise modified and in effect from time to time, collectively, the
"Notes"), each executed and delivered by the Borrower in favor of the
Lender, the Lender will make loans to the Borrower in aggregate amounts
of up to but not exceeding $1,500,000, US$750,000 and $500,000,
respectively, to provide the Borrower with the working capital to finance
its product development, including, without limitation, the development
of the Borrower's Meta 6000 semiconductor chip (the "Meta 6000 chip") and
finance equipment used for such development; and"
(c) Section 1.01 (a) of the Security Agreement shall be amended by (i)
deleting the word "Note" in the first sentence thereof and replacing with the
word "Notes" and (ii) amending and restating in its entirety the definition of
"Second Obligations" to read as follows::
""Secured Obligations" shall mean (a) the principal of and interest
on the Notes and all other amounts from time to time owing to the Lender
under the Notes, and (b) all amounts from time to time owing to the
Lender by the Borrower hereunder."
(d) Section 1(b) (ii) shall be amended by deleting the words "the Note"
and replacing them with the words "any Note".
(e) Section 4.04(b) of the Security Agreement shall be amended and
restated in its entirety to read as follows:
"(b) Notwithstanding anything contained herein to the contrary, but
subject to the relevant provisions of the Notes which limit the right of
the Borrower to dispose of its property, so long as no Event or Default
shall have occurred and be continuing, the Borrower may exploit, use,
enjoy, protect, license and sublicense the Intellectual Property in the
ordinary course of its business. The exercise of rights and remedies
under Section 4.05 hereof by the Lender shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by the
Borrower in accordance with the first sentence of this clause (b)."
(f) Section 4.12 of the Security Agreement shall be amended by deleting
the word "Note" and replacing it with the word "Notes".
Section 3. Representations and Warranties. The Borrower represents and
warrants to the Lender that (a) this Amendment No. 1 has been duly and validly
executed and delivered by the Borrower and constitutes the Borrower's legal,
valid and binding obligation, enforceable in accordance with its terms and (b)
after giving effect to this Amendment No. 1, (i) no Event of Default shall have
occurred and be continuing and (ii) the representations and warranties of the
Borrower in each Note are true and correct on and as of the date hereof with
the same force and effect as if made on and as of such date (except to the
extent such representations and warranties relate to a specific date). Any
breach by the Borrower of its representations and warranties contained
in this Section 3 shall be an Event of Default for all purposes of the Notes.
2
3
Section 4. Documents Otherwise Unchanged. Except as herein provided, the
Security Agreement shall remain unchanged and in full force and effect, and
each reference to the Security Agreement in the Security Agreement and the
Notes shall be a reference to the Security Agreement as amended hereby and as
the same may be further amended and in effect from time to time.
Section 5. Counterparts. This Amendment No. 1 may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and either party
hereto may execute this Amendment No. 1 by signing any such counterpart.
3
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed as of the day and year first above written.
INTERNATIONAL META SYSTEMS, INC.
By /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
AMERSCAN PARTNERS, III LIMITED
PARTNERSHIP
by its General Partner
AMERSCAN CAPITAL MANAGEMENT
LTD., as General Partner
By /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
Director and Deputy Chairman
4
