Document:

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                                                                    Exhibit 10.2

                                LOAN AGREEMENT
                                --------------

    LOAN AGREEMENT (this "Agreement") dated as of October 16, 2000, by and
between Bank of New Hampshire, N.A., a national banking association with a place
of business at 28 Main Street, Jaffrey, New Hampshire 03452 (the "Bank"), and
SeaChange International, Inc., a Delaware corporation with an address of 124
Acton Street, Maynard, Massachusetts 01754 (the "Borrower").

                             W I T N E S S E T H:

    WHEREAS, the Bank is hereby making two loans to the Borrower of even date in
the respective amounts of Five Hundred Forty-four Thousand Dollars ($544,000.00)
and Six Hundred Fifty-six Thousand Dollars ($656,000.00) for the purposes of
financing the construction/renovation of real estate of the Borrower at 32 Mill
Street, Greenville, Hillsborough County, New Hampshire (the "Premises"); and

    WHEREAS, the parties wish to set forth in writing the terms and conditions
upon which the Bank is making said loans to the Borrower;

    NOW, THEREFORE, in consideration of the foregoing and of the following
mutual promises, the parties confirm and agree as follows.

SECTION 1.  DEFINITIONS.  The following terms as used in this Agreement shall
            -----------
have the meanings set forth below.

    1.1  Architect: Any and all architects now or hereafter engaged by the
Borrower for the design of the Project.

    1.2  Architect's Contracts:  Any and all agreements by and between the
Borrower and the Architect for, among other things, the design of the Project.

    1.3  Closing:  The date on which the Bank makes and the Borrower takes the
Loans.

    1.4  Collateral Assignment:  The Collateral Assignment of Contracts, Plans
and Permits of even date from the Borrower to the Bank.

    1.5  Construction Contract:  Any and all contracts by and between the
Borrower and the Contractor for, among other things, the construction of the
Project.

    1.6  Construction Term:  The period commencing on the date of this Agreement
and continuing through the Conversion Date.

    1.7  Contractor: Hutter Construction Corporation.

    1.8  Contracts:  All contracts relating to the design and construction of
the Improvements and the Project.

    1.9  Conversion Date:  The date upon which the $544,000.00 Note converts to
an amortizing note pursuant to Section 2.5 of this Agreement.

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    1.10  Environmental Indemnity: Environmental Indemnification Agreement of
even date from the Borrower to the Bank.

    1.11  Financial Statements:  The most recent financial statements of the
Borrower heretofore delivered to the Bank.

    1.12  Improvements:  The improvements to be constructed on the Premises in
accordance with the Plans and Specifications with the proceeds of the Loans and
all personal property, fixtures and appurtenances, additions, replacements and
improvements, including site improvements and landscaping, constructed on or
existing on the Premises, now or at any time hereafter, including substitutions
therefor and the proceeds thereof.

    1.13  Leases.  Any and all leases with respect to the Premises to be entered
into by the Borrower as Lessor.

    1.14  Lease Assignments:  The Collateral Assignments of Leases and Rents of
even date from the Borrower to the Bank.

    1.15  Loans:  One or more advances to the Borrower by the Bank for the
purpose of construction financing in accordance with the terms, provisions and
conditions of this Agreement, in amounts as follows: (a) an amount not exceeding
Five Hundred Forty-four Thousand Dollars ($544,000.00) ("$544,000.00 Loan"), and
(b) an amount not exceeding Six Hundred Fifty-six Thousand Dollars ($656,000.00)
("$656,000.00 Loan").

    1.16  Loan Documents:  This Agreement, the Notes, the Mortgages, the
Collateral Assignment, the Lease Assignments, the Environmental Indemnity, and
any other documents now or hereafter executed by the Borrower or any endorser,
and delivered to the Bank, the purpose of which is to evidence or secure the
Borrower's repayment of the Loans and the performance of its obligations under
this Agreement.

    1.17  Mortgages:  Mortgage, Security Agreement and Fixture Filings (and
related U.C.C. Financing Statements) of even date executed by the Borrower as
mortgagor, for the benefit of the Bank as mortgagee, granting the Bank valid and
effectual first ($544,000.00) and second ($656,000.00) liens upon the Premises.

    1.18  Notes:  The promissory notes from the Borrower to the Bank of even
date in the respective face amounts of Five Hundred Forty-four Thousand Dollars
($544,000.00) and Six Hundred Fifty-six Thousand Dollars ($656,000.00).

    1.19  Permits:  All federal, state and local governmental approvals,
licenses and permits, including, without limitation, all building permits,
variances, special exceptions, zoning approvals, subdivision approvals and site
plan approvals, and all other approvals (including, without limitation, septic
system approvals, subdivision approvals, water system approvals and "site
specific" approvals) granted to the Borrower to enable the Borrower to construct
the Improvements upon the Premises and to operate the same.

    1.20  Permanent Terms:  The period commencing on the date immediately
following the Conversion Date and continuing through the date that is ten (10)
years from the Conversion

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Date (for the $544,000.00 Loan and through the date that is five (5) years from
the Conversion Date (for the $656,000.00 Loan.

    1.21  Plans and Specifications:  The plans and specifications approved by
the Bank pursuant to which the Improvements are to be constructed on the
Premises.

    1.22  Premises:  A certain tract or parcel of land, with the buildings and
improvements thereon and the appurtenances thereto, located at 32 Mill Street,
Greenville, Hillsborough County, New Hampshire more particularly described in
Exhibit A attached hereto and incorporated herein by reference.

    1.23  Project:  The Improvements as constructed on the Premises.

    1.24  Schedule of Sources and Uses of Funds:  The schedule of sources and
uses of funds for the construction of the Project and estimated timetable for
the construction of the Project.

    1.25  Security Interest:  The security interest in the Borrower's personal
property granted to the Bank by the Borrower pursuant to the Mortgage.

SECTION 2.  THE LOANS.
            ---------

    2.1  The Loans:  Subject to the terms of this Agreement, the Borrower will
take and the Bank will make the Loans.

    2.2  The Notes:  To evidence its obligation to repay the Loans, the Borrower
will execute and deliver the Notes to the Bank.

    2.3  Security:  The Borrower's obligations to repay the Loans as evidenced
by the Notes and to perform its other obligations under the Loan Documents are
secured by:  (i) the Mortgage  and the lien and Security Interest granted
therein; (ii) the Collateral Assignment; (iii) the Lease Assignments, and the
collateral granted to the Bank in such documents (the "Collateral").

    2.4  Use of Loan Proceeds:  The proceeds of the Loans shall be utilized by
the Borrower only to construct the Project on the Premises in accordance with
the amounts set forth in the Prologue to this Agreement and the Plans and
Specifications.

    2.5  Conversion to Amortizing Loan.  During the Construction Term (i.e.,
until the Conversion Date), the Notes shall provide for monthly payments of
interest only; at all times following the Conversion Date ("Permanent Term"),
the Borrower shall make amortized payments of principal and interest as more
specifically set forth in the Notes.  The "Conversion Date" is hereby defined as
the date upon which the full satisfaction of all of the "Conversion Conditions"
(as hereinafter defined), occurs.  The "Conversion Conditions" are defined as
all of the following: (i) final lien waivers or releases from the Contractor and
each and every subcontractor and supplier of materials who has supplied goods
and/or services worth at least Two Thousand Dollars ($2,000.00) with respect to
the Project; (ii) final Certificate(s) of Occupancy issued by the Town of
Greenville with respect to the Project and the Borrower (and

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any tenants) shall have taken occupancy thereof; (iii) cash or certified funds
from the Borrower to the Bank in an amount necessary to pay all accrued and
outstanding interest and any other costs or charges outstanding under the Loans;
(iv) the Improvements shall have been constructed upon the Premises without any
mechanics' or materialmen's liens, and in strict conformity with the Plans and
Specifications; and (v) no Event of Default shall have occurred or be
continuing.

SECTION 3.  REPRESENTATIONS AND WARRANTIES OF THE BORROWER
            ----------------------------------------------

    In order to induce the Bank to make the Loans, the Borrower makes the
following representations, warranties and promises:

    3.1  The execution, delivery and performance of the Loan Documents are not
in contravention of law or the terms of other documents, agreements or
undertakings to which the Borrower is a party or by which such party is bound.
No approval of any person, corporation, governmental body or other entity not
provided herewith is a prerequisite to the execution, delivery and performance
of the Loan Documents or any of the documents submitted to the Bank in
connection with the Loans, or to insure the validity or enforceability thereof.

    3.2  When executed by the Borrower, the Loan Documents will constitute the
legally binding obligations of the Borrower, enforceable in accordance with
their terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally.

    3.3  The construction of the Improvements upon the Premises and the use and
operation of the Improvements and the Premises does and will comply with all
applicable federal, state and local land use, environmental and other statutes,
laws and regulations and the Project has received and will receive all necessary
Permits.

    3.4  Subject to any limitations stated therein or in connection therewith,
the Financial Statements, all earning statements, projections, budgets and pro
formas, cost certification documents, disbursement requests, invoices, loan
applications, mechanics' lien affidavits, financial data and all other documents
which have been or shall hereafter be furnished to the Bank to induce it to
enter into this Agreement or to continue to perform and to make disbursements
hereunder, do to the best of their knowledge and belief, or will, fairly
represent the financial condition of the Borrower and are, or will be, accurate,
true and complete in all material respects.

    3.5  The Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly and
completely set forth the financial position of the Borrower as of their
respective dates.  Except as previously disclosed in writing to the Bank, since
the date of the Financial Statements, there has been no significant assignment
of assets or material change or threatened change in the financial condition,
operation or business prospects of the Borrower.

    3.6  There is not now pending against the Borrower, nor is there threatened,
any litigation, investigation, eminent domain or any proceedings before any
court or administrative or governmental agency, the outcome of which might
adversely affect the financial condition or the continued operation of the
Borrower or the development or operation of the Premises and Improvements other
than those listed in Schedule 3.6. There exists no unrepaired casualty with
respect to the Project.

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    3.7  The Borrower is the owner of the Premises, in fee simple, and there are
no liens or encumbrances which will be prior to the respective liens of the
Mortgage and other Loan Documents, except for those acceptable to the Bank as
shown on the commitment for title insurance.  The liens, security interests and
assignments created by the Loan Documents will, when granted, be valid,
effective, properly perfected and enforceable liens, security interests and
assignments.

    3.8  To the Borrower's knowledge, the Premises have not been used for the
generation, treatment, storage or transportation of "hazardous waste", as that
term is defined under applicable federal and state law.  In the event that the
Borrower becomes aware of the presence of any such substance on the Premises or
the Borrower becomes aware of the commencement of any state, federal, local or
private environmental or land use investigation or enforcement proceeding or
threat thereof, the Borrower will immediately provide written notice thereof to
the Bank.

    3.9  To the Borrower's knowledge, the are no underground fuel storage tanks
located on the Premises.

    3.10  The Premises are not located in a Flood Hazard Zone, so-called, or if
they are so located, the Borrower will procure flood insurance and will deliver
certificates for such insurance at closing.

    3.11  All utility services necessary for the use and operation of the
Project are available on or at the boundary of the Premises or by unencumbered
easement and have sufficient capacity for the use and operation of the Project.

    3.12  Any borrowings or payments made by the Borrower pursuant to the Loan
Agreement do not and will not render the Borrower insolvent, the Borrower is not
contemplating either the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidating of all or a major portion of
its property, and the Borrower has no knowledge of any person contemplating the
filing of any such petition against it, including the properties and assets
reflected in its financial statement referred to herein.

    3.13  No statement of fact made by or on behalf of the Borrower in this
Agreement, or in any certificate or schedule furnished to the Bank pursuant
hereto, contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained therein or herein not
misleading. There is no fact presently known to the Borrower which has not been
disclosed to the Bank which materially affects adversely, or as far as the
Borrower can foresee, will materially affect adversely, the property, business,
operations or condition (financial or otherwise) of the Borrower, the Premises
or the Improvements.

    3.14  The Borrower has filed all federal, state and local tax returns
required to be filed and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments.

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    3.15  The making of the Loans or the execution and delivery of the Loan
Documents will not subject the Bank to any claim for a brokerage commission.

    3.16  The Borrower has paid in full or has made other satisfactory
arrangements for payment of all premiums for insurance policies being delivered
to the Bank.

    3.17  All warranties and representations heretofore made by the Borrower to
the Bank in connection with efforts to obtain the Loans, including all
projections, budgets and pro formas, are incorporated herein by reference and
shall be deemed to be material and to have been relied upon by the Bank in
making the Loans.

    3.18  The Borrower is a corporation, duly authorized and validly existing
under the laws of the State of Delaware, with powers adequate to own its
properties, and to carry on its business as presently conducted by it
(including, but not limited to, within the State of New Hampshire).  The
execution, delivery and performance of the Loan Documents to which the Borrower
is a party are not in contravention of the Articles or By-laws of the Borrower,
or of any provisions of law or the terms of any documents, agreements or
undertakings to which the Borrower is a party or by which such party is bound.

SECTION 4.  COVENANTS OF THE BORROWER
            -------------------------

    A.  Affirmative Covenants
        ---------------------

    4.1  During the term of this Agreement, the Loan Documents and any
extensions, replacements or renewals thereof, the Borrower will maintain
insurance as follows:

    (a)  The Borrower will provide and maintain insurance in full force and
         effect and will deposit all original policies with the Bank for the
         following:

         (i)  during the course of the construction of the Improvements and any
         additions or replacements to or for the Project, so-called "Builder's
         Risk" insurance with extended coverage in an amount not less than the
         replacement cost of all improvements upon the Premises, insuring all
         work accomplished on the Premises, including equipment and materials
         delivered to the Premises for incorporation into the Premises;

         (ii)  public liability insurance in such amount and with such coverage
         as is reasonably required by the Bank including, if requested by the
         Bank, liability insurance on vehicles owned or operated by the
         Borrower;

         (iii)  worker's compensation insurance as required by statute;

         (iv)  from and after the Conversion Date, fire and broad form extended
         coverage in an amount not less than the greater of (a) the replacement
         cost of all improvements upon the Premises, or (b) the entire unpaid
         balance (principal, interest, outstanding costs or charges) of the
         Loans; and

         (v)  such other hazard insurance as the Bank may reasonably request
         including, but not limited to, flood insurance (if the Premises are
         located in a flood hazard zone), which flood insurance shall be in an
         amount not less

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         than the lesser of (A) one hundred percent (100%) of the full
         replacement value of improvements on the Premises, (B) the outstanding
         balance (principal and accrued interest) of the Loan, or (C) the
         maximum amount of flood insurance available.

    (b)  All such insurance:

         (i)  shall be issued by companies satisfactory to the Bank and
         authorized to do business in the State of New Hampshire, and shall be
         satisfactory in all material respects to the Bank;

         (ii)  shall show the Borrower and the Bank as insured, as their
         interest may appear, or, where appropriate, showing the Bank as an
         additional named loss-payee and/or named insured; and

         (iii)  shall contain provisions providing for twenty (20) days' prior
         written notice to the Bank of any intended cancellation.

    (c) In the event of failure to provide insurance as herein provided, the
    Bank may at its option, but without obligation to do so, and without waiving
    any of its rights hereunder, provide such insurance and charge the amount to
    the Borrower's Loan account.

    (d) Original policies of insurance and/or insurance certificates
    satisfactory to the Bank and its counsel with coverage as aforesaid shall be
    delivered to and deposited with the Bank at Closing.

    4.2  The Borrower shall notify the Bank in writing as soon as the Borrower
has knowledge of any default hereunder, any casualty to the Project, in whole or
in part, or of any actions, suits, eminent domain proceedings, investigations or
proceedings at law, in equity or before any governmental authority, pending or
threatened, against or affecting the Borrower or the security or involving the
validity or enforceability of the Loan Documents or the priority of the liens
created thereunder.

    4.3  The Borrower agrees that, within thirty (30) days from the date real
estate taxes, or any assessments, relative to the Premises must be paid without
incurring a penalty, it will pay the same (except for such taxes or assessments
which are either paid through the tax escrow provided for in the Mortgage or
which are contested in good faith provided that adequate security is provided to
the Bank to prevent injury or loss as a result of such contest), and will
furnish to the Bank a receipted tax or assessment bill, as requested by the
Bank.

    4.4  The Borrower agrees to execute any and all documents required by the
Bank to confirm the Bank's position as a first lienholder on the Premises and to
faithfully comply with the terms of this Agreement and the Loan Documents.

    4.5  The Borrower shall furnish the Bank:

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         (i) Within ninety (90) days after the close of each fiscal year of each
    of the Borrower:

          (A) a statement of members'/shareholders' equity and a statement of
              cash flow of the Borrower for such fiscal year;

          (B) income statements of the Borrower for such fiscal year; and

          (C) balance sheets of the Borrower as of the end of such fiscal year.

          All such annual statements shall be prepared in accordance with
    generally accepted accounting principles, shall present fairly the financial
    position and results of operations of the Borrower and shall be prepared and
    audited by an independent certified public accountant selected by such
    parties and acceptable to the Bank (it being acknowledged that the
    Borrower's present accountant is acceptable to the Bank).  The Bank shall
    have the right, from time to time, to discuss the affairs of the Borrower
    directly with such independent certified public accountants after notice to
    the Borrower and opportunity of the Borrower to be represented at any such
    discussions; and

          (ii) Within ten (10) days of the filing thereof, true and complete
    copies of quarterly 10-Q reports of the Borrower; and

          (iii)  Such other financial information as the Bank shall reasonably
    request   from time to time, including, but not limited to, evidence of
    compliance with all financial covenants set forth in this Agreement.

    4.6  The Borrower agrees to pay all costs and reasonable expenses incidental
to the Loans, the preservation of the Collateral, the collection of the Notes
and the foreclosure of the Mortgages, including, but not limited to, any
appraisals required or provided for hereunder, real estate transfer taxes, title
examination and endorsement fees, title insurance premiums, recording fees,
attorneys' fees (including those of the Bank's counsel), brokerage fees,
architectural fees and site inspection fees.

    4.7  The Borrower shall put and maintain the Premises and Improvements
thereon in good repair, working order and condition, and from time to time shall
make all needful and proper repairs, renewals and replacements.

    4.8  The Borrower shall promptly pay for all labor, materials, equipment and
fixtures used in connection with the construction of the Improvements and all
other costs relating to the Improvements.

    4.9  The Borrower shall strictly enforce the Construction Contracts to
ensure that the Contractor is required to promptly and diligently perform all of
its obligations thereunder and in such a manner as to preserve the Bank's
security in the Premises and Improvements.  No change, amendment or modification
shall be made to such contract without prior written consent of the Bank.

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    4.10  No materials, equipment, fixtures or any other part of the
Improvements, or articles of personal property placed in the Improvements, shall
be purchased or installed under any security agreement or other arrangements
wherein the seller reserves or purports to reserve the right to remove or to
repossess any such items or to consider them personal property after their
incorporation into the Improvements.

    4.11  The Borrower shall pay all bills when due, keep books and records in
accordance with generally accepted accounting principals, consistently applied,
and will permit a representative on behalf of the Bank to examine and audit the
books of its business.  The Borrower shall inform the Bank immediately of any
litigation involving the Borrower, the adverse determination of which might
prejudice repayment of either Loan.

    4.12  After the execution of this Agreement, any and all publicity releases
to newspapers of general or limited circulation or trade publications announcing
any of the financing by the Bank provided for herein shall be issued by or
subject to prior approval by the Bank.  The Bank shall erect a sign upon the
Premises indicating that the Bank is the source of the financing of the
construction of the Improvements.

    4.13  The Borrower shall use and operate the Project in compliance with all
applicable laws.

    4.14  The Borrower shall furnish the Bank with such appraisals of the
Project as the Bank may reasonably request, from time to time, including without
limitation, an appraisal of the Project, the Improvements and the Premises
acceptable to the Bank upon completion of the Project.

    4.15  The Borrower shall construct the Improvements in strict conformity
with the Plans and Specifications and shall not make any change in the Project
design or structure  without the prior written approval of the Bank, which
approval shall not be unreasonably withheld.

B.  Negative Covenants.
    ------------------

    4.16  The Borrower shall not transfer the Project, the Improvements or the
Premises, or any interest therein, to any person without the prior written
consent of the Bank, which consent shall not be unreasonably withheld.

    4.17  The Borrower shall not permit any person to assume the Mortgage or any
other lien described in this Agreement.

    4.18  The Borrower shall not, without the prior written consent of the Bank
(which shall not be unreasonably withheld), create, assume, incur or suffer to
be created, assumed or incurred, any mortgage, lien, pledge, attachment or
security interest or encumbrance of any kind in respect to the Premises, the
Project or the Improvements during the term of either Loan, even if the same is
subordinate to any lien given to the Bank to secure either Loan.

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    4.19  The Borrower shall not sell or dispose of any of its assets except for
reasonably  equivalent consideration and in the ordinary and usual course of its
business.  In addition, the Borrower shall not permit the sale, transfer or
redemption of any of its membership interests without the prior, written consent
of the Bank.

    4.20  The Borrower shall not enter into any Lease without obtaining the
Bank's prior, written approval thereof, such approval not to be unreasonably
withheld, conditioned or delayed, and the Borrower shall upon execution thereof
furnish a fully executed copy of each Lease entered into during the term of
either Loan.

    4.21  As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Debt Service Coverage Ratio
shall be no less than 1.5:1, calculated as follows: (A) net income, plus
interest expense, plus depreciation, plus amortization expense, divided by (B)
current maturity of long-term indebtedness, plus capital lease expense.  The
information set forth in the Borrower's financial statements and tax returns as
required under this Agreement shall be conclusive in determining the Borrower's
compliance with such ratio.

    4.22  As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Quick Ratio shall be no
less than 1.0:1, calculated as follows: (A) cash on hand, plus accounts
receivable not more than sixty (60) days past invoice date, divided by (B)
current liabilities.  The information set forth in the Borrower's financial
statements and tax returns as required under this Agreement shall be conclusive
in determining the Borrower's compliance with such ratio.

    4.23  As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Tangible Net Worth shall be
no less than Thirty Million Dollars ($30,000,000.00), calculated as follows: the
Borrower's capital stock account, plus subordinated indebtedness of the
Borrower, plus the Borrower's retained earnings, plus additional paid in
capital, minus treasury stock, minus intangible assets. The information set
forth in the Borrower's financial statements and tax returns as required under
this Agreement shall be conclusive in determining the Borrower's compliance with
such ratio.

SECTION 5.  CONDITIONS PRECEDENT TO THE MAKING OF THE LOANS
            -----------------------------------------------

    The obligation of the Bank to make the Loans is subject to the satisfaction
by the Borrower or its representatives of the following conditions precedent:

    5.1  The Borrower's warranties and representations as contained in Section 3
hereof shall be accurate and complete as of the date of Closing.

    5.2  No Event of Default (as defined herein or in either Note or any Loan
Document) shall have occurred or be continuing.

    5.3  The Borrower shall have executed and delivered all of the Loan
Documents to which it is a party.

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    5.4  The Borrower shall have delivered all of the documents and materials
listed on the Closing Agenda attached hereto as Exhibit C to the Bank, all of
which must be acceptable, in both form and substance, to the Bank and its
counsel, including, but not limited to, the following:

    (a)  Copies of all Permits;

    (b)  Copies of all Contracts;

    (c)  Copies of the Plans and Specifications;

    (d)  Certificates of insurance as required by Section 4.1 hereof;

    (e)  Evidence that the Premises are not located in a Flood Zone, so-called,
    or that the Project is covered by flood insurance acceptable to the Bank;

    (f)  Receipted bills for real estate taxes and other charges or assessments
    against the Project;

    (g)  The Financial Statements;

    (h)  Evidence that utilities are available to the Premises and the
    Improvements at the boundary of the Premises or by way of unencumbered
    easement with sufficient capacity including, without limitation, such
    evidence as the following utilities:  (i) water, (ii) sewer, (iii)
    electricity, (iv) telephone and (v) gas;

    (i)  A title insurance policy (ALTA Loan Policy-1970) written with a company
    acceptable to the Bank, insuring that the Bank has a valid lien of record on
    the Premises subject only to the Bank's prior mortgages on the Premises and
    those exceptions approved by the Bank and (i) having all standard
    exceptions, so-called, deleted and (ii) including such other affirmative
    insurance and endorsements as may be requested by the Bank;

    (j)  An opinion of counsel to the Borrower in the form of Exhibit B attached
    hereto and incorporated herein by reference;

    (k)  Satisfactory environmental site assessments by such environmental
    consultants as are acceptable to the Bank regarding the presence of
    hazardous waste and materials on the Premises;

    (l)  The Schedule of Sources and Uses of Funds; and

    (m)  Consents by the Architects and the Contractor to the Collateral
    Assignment of Contracts, Plan and Permits.

    5.5  The Borrower shall have paid all costs incurred in connection with the
Closing of the Loans including, without limitation, attorneys' fees of Bank's
counsel and title insurance premiums.  To the extent that such costs are not
paid at Closing, the Borrower hereby authorizes the Bank to pay the same out of
the proceeds of the Loans.

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    5.6  The Borrower shall furnish the Bank with such other documents,
opinions, certificates, evidence and other matters as may be requested by the
Bank at or prior to Closing.

SECTION 6.  DISBURSEMENT OF LOAN PROCEEDS
            -----------------------------

    6.1  The obligation of the Bank to make disbursement of proceeds of the
Loans to the Borrower for purposes of construction of the Improvements (the
"Construction Disbursement") is subject to satisfaction of the following
conditions precedent on or before each disbursement to the Borrower:

          (a)  The warranties and representations of the Borrower as contained
          in Section 3 hereof shall be accurate and complete as of the date that
          the Borrower request a disbursement of Loan proceeds from the Bank
          (the "Requisition Date");

          (b)  The Borrower shall not be in default under any of the covenants
          contained in Section 4 hereof as of the Requisition Date;

          (c)  All conditions precedent to the making of the Loans as set forth
          in Section 5 hereof shall continue to have been satisfied and the
          Borrower shall have notified the Bank of any changes in the status
          thereof, which changes shall have been approved by the Bank;

          (d)  In addition, if requested by the Bank, the Borrower shall furnish
          the Bank with the following, all of which shall be acceptable, in both
          form and substance, to the Bank:

              (i) plans and specifications for the portion of the Improvements
              to be so funded, including (but not limited to) an updated survey
              of the Premises showing the location of the Improvements
              constructed thereon as of the Requisition Date;

              (ii)  affidavits and lien waivers from the Contractor and
              subcontractors and suppliers providing goods or services with a
              value greater than or equal to Two Thousand Dollars ($2,000.00)
              sufficient to ensure that the priority of the lien of the
              Mortgages will not be subject to any mechanics' or materialmen's
              liens held by such Contractor or subcontractors;

              (iii)  an endorsement to the title insurance policy theretofore
              delivered to the Bank insuring that the Bank has a valid first
              lien on the Premises up to at least the amount of Loan proceeds
              the Bank has then disbursed to the Borrower (including the
              requested disbursement) subject only to such matters and
              exceptions as are acceptable to the Bank;

                                       12
<PAGE>

              (iv)  an inspection of the Improvements constructed on the
              Premises by the Bank, or its architects, engineers or other
              representatives, at the Borrower's reasonable expense (to occur
              within five (5) business days from date of requisition),
              indicating (a) that the Improvements are being constructed in
              substantial compliance with the Plans and Specifications and in a
              good and workmanlike manner; (b) that the amount of loan proceeds
              requested at the Requisition Date, together with amounts requested
              at earlier Requisition Dates and sums contributed by the Borrower,
              accurately reflect the status of the construction of the
              Improvements; and (c) that the undistributed proceeds of the Loans
              as of the Requisition Date will be sufficient to complete the
              construction of the Improvements;

              (v)  the Borrower shall furnish the Bank with such other
              documents, opinions, certificates, evidence and other matters as
              may be requested by the Bank as conditions precedent to making the
              requested disbursement; and

          (e)  The Loan Documents shall remain in full force and effect.

    6.2  All requests for disbursements of Loan proceeds for purposes of
construction of the Improvements shall be made on AIA Forms, or forms
substantially similar to AIA forms and satisfactory to the Bank, not less than
ten (10) business days prior to the date of the requested disbursement, shall be
made on forms approved by the Bank, with such detail and with such supplementary
information as is acceptable to the Bank, and shall not be made more frequently
than once per thirty (30) day period.

    6.3  The Bank will make all disbursements pursuant to this Agreement to a
commercial demand deposit account in the Borrower's name at the Bank, and the
Borrower agree to make all payments on account of the construction of the
Improvements from such account.

    6.4  Upon receipt by the Bank of a disbursement request as set forth in
Section 6.2, together with satisfactory evidence that the conditions precedent
set forth in Section 6.1(i) through (v) have been satisfied, the Bank shall make
advances as construction progresses, in amounts equal to: (a) ninety percent
(90%) of expenditures for labor performed and material supplied under the
Construction Contract for construction of the Improvements in accordance with
the Plans and Specifications during the period immediately preceding the
advance, plus (b) one hundred percent (100%) of indirect construction costs
actually paid or incurred by the Borrower that have not been covered by previous
advances.  Indirect construction costs shall mean those costs related to the
construction of the Improvements, other than the cost of labor and materials,
and include, but are not limited to, title insurance premiums, permit fees,
architect and engineering fees, legal fees, loan fees, taxes and interest during
construction, but do not include any profit to the Borrower or any affiliate
thereof.

    6.5  In the event the Bank shall reasonably determine that the actual direct
and indirect costs to complete the construction of the Improvements will exceed
the proceeds of the Loans available for advance, the Bank may, at its option,
refuse to make or approve

                                       13
<PAGE>

further disbursements and may require the Borrower to make a cash deposit of an
amount equal to such excess with the Bank for disbursement in accordance
herewith. The Bank may commingle such deposited amounts with its own funds and
such deposited amounts shall, if the Borrower is not in default hereunder beyond
the applicable cure period, earn interest at then market rates. No Loan proceeds
shall be advanced while amounts so deposited are available for disbursement. The
deposit requirements of this paragraph are in addition to the deposit or escrow
requirements in the Mortgage and may be required repeatedly as the Bank
reasonably determines is necessary. The Bank's waiver of this right on any
occasion shall not affect its right to impose the requirement at another time.

    6.6  The making of any disbursement of any part thereof by the Bank shall
not be deemed an approval or acceptance by the Bank of work theretofore
performed or materials theretofore furnished.

    6.7  The Bank's obligation to disburse proceeds of the Loans for
construction purposes shall terminate on the Conversion Date.

SECTION 7.  GENERAL CONDITIONS; MISCELLANEOUS
            ---------------------------------

    7.1  The Bank shall have the right to enter on the Premises for the purpose
of inspecting the Project at all reasonable times and upon reasonable notice
(with the exception of emergencies, in which event the Bank may enter at any
time and without any notice).  However, all inspections which may be made by the
Bank or its agents are made solely to ascertain the condition of the Project and
the Borrower agrees that the Bank does not thereby assume additional
responsibilities, and agree that they will defend (with counsel reasonably
acceptable to the Bank), indemnify and hold the Bank harmless from any liability
asserted by reason of such inspections or by reason of this Agreement.  The Bank
may engage independent architect/engineer consultants, to aid in the inspection
of the Project and to perform such other consulting responsibilities as may be
required.  All reasonable fees and expenses incurred by such architects or
engineers shall be paid by the Borrower.

    7.2  Upon discovery by the Bank of any deviation from the Plans and
Specifications or of defective or unworkmanlike labor or materials being used in
the construction of the Improvements, the Bank may immediately order stoppage of
construction and demand that any unsatisfactory work be replaced and that the
condition be corrected, whether or not any unsatisfactory work has already been
incorporated into the Improvements.  After issuance of such an order in writing,
the condition shall be corrected within fifteen (15) days from the date of
stoppage by the Bank.  No other work shall be done on the Improvements without
the prior written consent of the Bank unless, and until, such condition has been
fully corrected.

    7.3  Except as expressly provided herein, all notices or other
communications between the Borrower and the Bank shall be in writing and shall
be hand delivered or given by registered or certified mail (return receipt
requested) at the addresses for each given in the introductory paragraph hereof,
and notices required herein shall be deemed to be given upon receipt of hand-
delivered notices or upon deposit of mailed notices with the United States Post
Office.

    7.4  The Bank reserves the right to participate with another lending
institution in the funding of the Loans, which shall be at no further cost to
the Borrower.

                                       14
<PAGE>

    7.5  The Borrower shall comply with all statutory posting requirements under
NHRSA 447.

    7.6  This Agreement constitutes the complete understanding between the
parties and may not be changed except by an agreement in writing signed by the
parties.  If any provision of this Agreement or the application thereof to any
person or circumstance is held invalid, such invalidity shall not affect other
provisions which can be given effect without the invalid provision or
application, and to this end, the provisions of this Agreement shall be
severable.

    7.7  The waiver of any of the terms and conditions hereof by the Bank shall
not be deemed to constitute a subsequent waiver of the same or any other term or
condition hereof.

    7.8  At any time during construction the Bank may request (with 45 days
prior written notice) the Borrower's most recent financial statements in form
acceptable to the Bank.

    7.9  The Borrower shall be solely responsible for any brokerage commission
or fee which may be claimed or payable in connection with the making of the
Loans and the Borrower shall defend (with counsel reasonably acceptable to the
Bank), indemnify and hold the Bank harmless from and against all costs and
expenses including reasonable attorneys' fees in connection with any such claim.

    7.10  This Agreement shall be governed, construed and interpreted by, and in
accordance with, the laws of the State of New Hampshire.  The Borrower, to the
extent that it may legally do so, hereby consents to the jurisdiction of the
courts of the State of New Hampshire and the United States District Court for
the State of New Hampshire, as well as to the jurisdiction of all courts from
which an appeal may be taken from such courts for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
with respect to the transactions contemplated hereby, and expressly waives any
and all objections it may have to venue in any such courts.

    7.11  If there is any conflict among the provisions of the Loan Documents,
that provision which furnishes the Bank with the most security or protection
shall apply.

    7.12  The Bank alone shall be bound by the obligations imposed hereunder and
under the Loan Documents on the Bank and neither the depositors, incorporators,
trustees or directors nor any officer or agent of the Bank or any of its
affiliates or subsidiaries shall be personally liable hereunder or thereunder
and the Borrower or any other party having any rights hereunder or thereunder
shall look solely to the Bank for payment of any claim under this Agreement or
the Loan Documents.

    7.13  It is understood by the parties hereto that the Bank's only
relationship to the Borrower or to the Project is that of lender and the Bank
has no obligation or responsibility for the Borrower's choices or use of
contractors, subcontractors, services and/or materials.  The Borrower shall
indemnify and hold the Bank harmless from any claim of any third party arising
out of the construction, use, occupancy or possession of the Premises and the
Improvements.

                                       15
<PAGE>

SECTION 8.  EVENTS OF DEFAULT
            -----------------

    8.1  The occurrence of any one or more of the following events shall
constitute a default (an "Event of Default") under this Agreement:

    (a) If any statement, representation or warranty made by the Borrower in the
Loan Documents or in connection therewith or any financial statement, report,
schedule, or certificate furnished by the Borrower or any of its officers or
accountants to the Bank during the term of this Agreement shall prove to have
been false or misleading when made, or subsequently becomes false or misleading,
in any material respect;

    (b) Default by the Borrower in payment within ten (10) days of the due date
of any principal or interest or other amounts called for under the Loan
Documents, including the failure to make payment when due under the Notes;

    (c) Default by the Borrower in the performance or observance of any of the
provisions, terms, conditions, warranties or covenants of the Loan Documents;

    (d) The occurrence of an event of default not cured within any applicable
remedy period, under any other obligations of the Borrower to the Bank, whether
created prior to, concurrent with, or subsequent to obligations arising out of
the Loan Documents;

    (e) The occurrence of an event of default not cured within any applicable
remedy period, under any other obligation of the Borrower for borrowed money or
under any lease in an aggregate amount of Fifty Thousand Dollars ($50,000.00) or
more;

    (f) The dissolution or termination of existence (including, but not limited
to, through merger or consolidation without the Bank's prior, written consent)
of the Borrower, or a sale of all or substantially all of the assets of the
Borrower out of the ordinary course of business; provided, however, that a
merger or consolidation shall not constitute an Event of Default hereunder if
the merged or consolidated entity meets the financial covenants hereinbefore set
forth in Sections 4.21, 4.22 and 4.23 as of the date of merger/consolidation and
at the end of each fiscal year thereafter;

    (g) The Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator for any of its property, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v)
file a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization to take advantage of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against it in
any proceeding under any such law or (vi) offer or enter into any composition,
extension or arrangement seeking relief or extension of its debts;

    (h) In the event that proceedings shall be commenced or an order, judgment
or decree shall be entered, without the application, approval or consent of the
Borrower, in or by any court of competent jurisdiction, relating to the
bankruptcy, dissolution, liquidation, reorganization or the appointment of a
receiver, trustee or liquidator of the Borrower, of all or a substantial part of
its assets, and such proceedings, order, judgment or decree shall continue
undischarged or unstayed for a period of 60 days;

                                       16
<PAGE>

    (i) A final and unappealable judgment for the payment of money in excess of
One Hundred Thousand Dollars ($100,000.00) shall be rendered against the
Borrower and the same shall remain undischarged for a period of 30 days, during
which period execution shall not be effectively stayed;

    (j) Any levy or execution upon, or judicial seizure of, any portion of any
collateral or security for either Loan;

    (k)  Any attachment or garnishment of, or the existence or filing of any
lien or encumbrance, other than any lien or encumbrance permitted by the Loan
Documents against any portion of any collateral or security for either Loan,
that is not removed or released within sixty (60) days after its creation;

    (l)  The institution of any legal action or proceedings to enforce any lien
or encumbrance upon any portion of any collateral or security for either Loan,
that is not dismissed within sixty (60) days after its institution;

    (m)  Title to the Premises is not satisfactory to the Bank by reason of any
lien, charge, encumbrance, title condition or exception (other than exceptions
permitted by the Bank to be contained in the title insurance policy to be issued
to the Bank in connection with the Loans);

    (n)  The Premises are materially injured or destroyed by fire or otherwise
which casualty is not insured, or the Premises or any portion thereof which
renders the Premises unsuitable for their intended use or which has a material
adverse effect upon the security for either Loan (as defined in the Loan
Agreement), are taken by eminent domain; or

    (o)  Construction of the Project (as defined in the Loan Agreement), once
commenced, shall cease for a period of sixty (60) consecutive days after a
cessation caused by weather or acts of God or other event beyond the control of
the Makers or, in any event, if the Project is not completed by January 31,
2001.

    Upon the occurrence of any Event of Default (which, in the case of an event
of default listed in paragraphs (a), (c), (d), (e) or (n) remains unremedied for
a period of thirty (30) days after written notice thereof to the Borrower by the
Bank), at the election of the Bank, (i) all of the obligations of the Borrower
to the Bank, either under this Agreement or otherwise, will immediately become
due and payable without further demand, notice or protest, all of which are
hereby expressly waived; (ii) the Bank may proceed to protect and enforce its
rights, at law, in equity, or otherwise, against the Borrower and any endorser
or guarantor of the Borrower's obligations, either jointly or severally, and may
proceed to liquidate and realize upon any of its collateral in accordance with
the rights of a secured party or a mortgagee under the Uniform Commercial Code,
any other applicable law, any Loan Document, any agreement between the Borrower
and the Bank or any agreement between any guarantor or endorser of the
Borrower's obligations to the Bank; and/or (iii) the Bank's commitment to make
further loans under this Agreement or any other agreement with the Borrower will
immediately cease and terminate.

                                       17
<PAGE>

    8.2  In addition to the provisions set forth above in Section 8.1, upon the
occurrence of any one or more of the Events of Default enumerated in the Notes
or a default of any of the Borrower's obligations hereunder, in each case beyond
the applicable cure period without remedy, and at any time thereafter the Bank,
at its option, may:

    (a)  Exercise any or all remedies available to it under the Loan Documents
    including, without limitation, the Statutory Power of Sale provided in the
    Mortgage.

    (b)  Occupy, take possession of, and use the Premises for such period of
    time as may be necessary to permit an orderly liquidation of the Premises or
    the Project or of any Collateral in and to which the Bank now has or
    hereafter acquires a security interest or other rights, title or interests,
    whether under this Agreement, any other Loan Document or any other agreement
    or document.

    (c)  Make such alterations, additions, improvements, renovations and repairs
    to the Premises, in a commercially reasonable manner, as may in the Bank's
    opinion be reasonably necessary to (i) complete the Project and the
    construction of the Improvements in accordance with the Plans and
    Specifications, provided that the Bank shall have the right to discontinue
    at any time the work undertaken and shall be under no obligation to continue
    any work on the Project; (ii) prevent the termination of any existing lease
    of all, or any portion thereof; (iii) keep the same usable for the purposes
    for which such Premises were used by the Bank or (iv) keep the Premises in a
    safe condition.  All sums expended hereunder shall be secured by the Loan
    Documents, payable on demand and, until so paid by the Borrower, bear
    interest at the highest rate then provided in the Notes.

    (d)  Collect the rents, issues and profits arising from any part of the
    Premises, past due and thereafter becoming due, and apply the same in such
    order of priority as the Bank deems appropriate to the payment of the costs
    and expenses incurred by the Bank in collecting such rents and managing the
    Premises, the indebtedness evidenced by the Notes and any other indebtedness
    secured hereby.  All monies advanced or expended by the Bank to collect such
    rents or manage the Premises shall be secured by the Loan Documents, payable
    on demand and, until so paid by the Borrower, bear interest at the highest
    rate provided for in the Notes. The taking of possession of the Premises and
    collection of rents by the Bank pursuant hereto shall not be construed as an
    affirmation of any lease of the Premises except such leases as the Bank has
    affirmed in writing, and the Bank or any other purchaser of the Premises at
    foreclosure sale may (if otherwise entitled to do so) exercise the right to
    terminate any such lease as though the taking of possession and collection
    of rents had not occurred pursuant hereto.

    (e)  For the purpose of carrying out the provisions and exercising the
    rights, powers and privileges granted by the Notes and this Section 8.2, the
    Borrower hereby irrevocably constitutes and appoints the Bank its true and
    lawful attorney-in-fact, with full power of substitution, to execute,
    acknowledge and deliver any instruments and do and perform any acts which
    are referred to in the Notes and this

                                       18
<PAGE>

    Section 8.2 in the name and on behalf of the Borrower. The power vested in
    said attorney-in-fact is, and shall be deemed to be, coupled with an
    interest and irrevocable.

    (f)  Upon demand or the occurrence of any of said Events of Default, the
    rights, powers and privileges provided in this Section 8 and all other
    remedies available to the Bank under this Agreement or under any of the Loan
    Documents or at law or in equity shall be cumulative and may be exercised by
    the Bank at any time and from time to time and shall not constitute a waiver
    of any of the Bank's right or remedies thereunder or hereunder, whether or
    not the indebtedness evidenced and secured by the Notes and the Loan
    Documents shall be due and payable, and whether or not the Bank shall have
    instituted any foreclosure proceedings or other action for the enforcement
    of its rights under the Notes or any of the Loan Documents.

SECTION 9.  COMPLETION GUARANTEE
            --------------------

    9.1  If for any reason whatsoever, the Borrower (i) fails or neglects to
complete construction of the Project and the Improvements contemplated by and
described in this Agreement on or before January 31, 2001, (ii) fails to
prosecute with diligence and continuity the construction of the Project and the
Improvements in accordance with this Agreement, (iii) commits or permits to
exist an Event of Default as defined in Section 8 of this Agreement, or (iv) is
unable to satisfy any condition precedent to obtaining an advance of the Loans
under this Agreement, then in any such event the Bank, in addition to the Bank's
other rights, remedies and recourse whether existing hereunder, under any Loan
Document, or otherwise, may proceed in accordance with the terms of this Section
9.  Within five (5) days from the date that the Bank notifies the Borrower of
the Borrower's failure to satisfy any condition enumerated in the first part of
this Paragraph 9.1, the Borrower hereby bind itself, at its sole cost and
expense, to commence completion of construction of the Project and the
Improvements and to diligently pursue such construction in order to complete the
Project and the Improvements within the time and in the manner specified in this
Agreement.  The Borrower shall pay all costs and expenses in connection with
such construction and shall indemnify and hold harmless the Bank from any and
all losses, costs, liabilities or expenses incurred in connection with such
completion.

    9.2  If the Borrower shall fail to commence completion of the Project and
the Improvements and to diligently pursue such construction as provided in
Paragraph 9.1, the Bank shall have (in addition to its other remedies under this
Agreement, the Loan Documents and applicable law), the following rights and
remedies:

    (a)  If such failure shall occur prior to a foreclosure sale of the
Premises, the Bank shall have an immediate right to damages in an amount equal
to the Borrower's indebtedness to the Bank arising under or in connection with
the Loans, together with the right to obtain immediate judgement against the
Borrower in that amount, and the Bank may exercise all remedies available under
the laws of the State of New Hampshire for action on a matured contractual
indebtedness;

    (b)  If such failure occurs after a foreclosure sale of the Premises, the
Bank shall have an immediate right to damages in an amount which is equal to the
sum necessary

                                       19
<PAGE>

to complete construction of the Project and the Improvements, as such sum may be
established by construction contracts, appraisals, or other competent evidence,
without any necessity of completing construction, less the sum equal to the
undisbursed balance of the Loans reduced by the amount of interest accruing
under the Notes and all expenses incurred by the Bank in connection with the
foreclosure sale and the related actions at law; and

    (c)  Regardless of whether such failure occurs before or after any
foreclosure sale of the Premises, the Bank shall have the right, but shall have
no obligation, to complete construction of the Project and the Improvements in
the manner specified in this Agreement by or through any agent, contractor or
subcontractor of its selection and to recover from the Borrower as damages the
amount of any and all expenditures made in connection with such completion.

SECTION 10.  RSA 399-B DISCLOSURE.
             --------------------

    Pursuant to RSA 399-B, the Bank hereby discloses to the Borrower the
following finance and other charges which the Borrower will incur in connection
with the Loans to be made by the Bank to the Borrower on or near even date:

    (a)  Interest Rate Applicable to the Loans:
         -------------------------------------

    (i) $544,000.00 Loan: During the Construction Term, interest shall accrue at
a fixed rate equal to eight and seven-eighths percent (8.875%), based upon a
banking year of actual/360 days. Upon the full satisfaction of the Conversion
Conditions and the resultant commencement of the Permanent Term, interest shall
accrue as follows: (i) for the first five (5) years of the Permanent Term,
interest accrue at a fixed rate equal to eight and seven-eighths percent
(8.875%), based upon a banking year of actual/360 days; and (ii) for the
remaining five (5) years of the Permanent Term, interest shall accrue at an
annually adjusted rate, to be set on the fifth (5th) anniversary date of the
Conversion Date and on the corresponding day of each year thereafter at the
"Base Rate" (as that term is hereinafter defined) in effect on such date, based
upon a banking year of actual/360 days.  The "Base Rate" is defined as the
interest rate per annum designated by the Bank as its "Base Rate", regardless of
whether such rate is in fact the lowest rate charged to commercial customers of
the Bank.  In the event that the Base Rate is not available, the holder hereof
will provide written notice to the Borrower of a comparable index.

     (ii) $656,000.00 Loan:  Interest shall accrue at a fixed rate equal to
eight and seven-eighths percent (8.875%), based upon a banking year of
actual/360 days.

     (b) Bank's Counsel Fees/Expenses          $ 7,300.00
         ----------------------------

     (c) Bank Commitment Fee                   $ 3,000.00
         -------------------

     (d) Title Insurance Premium               $ 2,075.00
         -----------------------

     (e) Appraisal Fee                         $ 3,000.00
         -------------

                                       20
<PAGE>

     (f) Site Assessment Fee (Review)          $   175.00
         ----------------------------

     (g) Construction Progress Inspections     $   425.00/visit (est.)
         ---------------------------------

     (h) Tax Monitoring/Flood Fee              $    21.00
         ------------------------

     (i) Recording Fees  (Estimate)            $   400.00
         --------------------------

     By its signature below, the Borrower acknowledges receipt of this
disclosure statement and receipt of copies of all documents prepared by the Bank
in connection with the Loans.

                                       21
<PAGE>

SECTION 11.  DISBURSEMENT REQUEST.
             --------------------

     The Borrower hereby requests disbursement of proceeds of the Loans as set
forth on Exhibit D.

SECTION 12.  CONSENT TO SECURITY INTEREST.
             ----------------------------

     Notwithstanding anything to the contrary in any loan document, the Bank
hereby consents to the blanket security interest granted by the Borrower to
Silicon Valley Bank, which were partially subordinated to the lien granted by
the Borrower to the Bank in the Mortgage.

     IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed on their behalf, all as of the day and year first hereinbefore
written.

                                        SeaChange International, Inc.
                                        (the "Borrower")

------------------------                By: /s/ William Fiedler
                                           ----------------------------------
Witness                                 William Fiedler, its duly authorized
                                        Chief Financial Officer

                                        Bank of New Hampshire, N.A. (the "Bank")

-------------------------               By: /s/ Benjamin J. Wheeler
                                           ----------------------------------
Witness                                 Benjamin J. Wheeler, its duly
                                        authorized Vice President

                                       22
<PAGE>

The following exhibits and schedules thereto have been omitted in accordance
with Rule 601(B)(2) of Regulation S-K:

Exhibit A         Legal Description of Premises
Exhibit B         Form of Legal Opinion of Counsel to Borrower
Exhibit C         Closing Agenda
Exhibit D         Disbursement List
Schedule 3.6      Litigation

The Company will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission (the "Commission") upon the
Commission's request; provided, however that the Company may request
confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended, for any schedule or exhibit so furnished.<PAGE>

                                                                    Exhibit 10.1
                                                                    ------------

                         REGISTRATION RIGHTS AGREEMENT
                         -----------------------------

     THIS REGISTRATION RIGHTS AGREEMENT is entered into as of August 8, 2000 by
and among Control Delivery Systems, Inc., a Delaware corporation (the
"Company"), and those stockholders of the Company listed on Schedule I attached
hereto (the "Holders").

     WHEREAS, the Company and the Holders wish to provide certain arrangements
with respect to the registration of shares of capital stock of the Company under
the Securities Act (as defined herein);

     NOW, THEREFORE, in consideration of the mutual promises and obligations
contained herein, the parties agree as follows:

1.    CERTAIN DEFINITIONS.  AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING RESPECTIVE MEANINGS:

     "Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act.

     "Common Stock" means the Common Stock, $.01 par value of the Company.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

     "Founders" means Paul Ashton and Thomas Smith.

     "Preferred Stock" means the Company's Series A Convertible Preferred Stock,
$.01 par value.

     "Registration Expenses" means the expenses described in Section 5.

     "Registrable Shares" means (a) the shares of Common Stock issued or
issuable upon conversion of any of the Preferred Stock, (b) any other shares of
Common Stock issued in respect of such shares (because of stock splits, stock
dividends, reclassifications, recapitalization, or similar events), (c) shares
of the Company's capital stock acquired pursuant to Section 2.2 of the
Stockholders' Agreement of even date herewith by and among the Company and the
Stockholders (as defined therein), and (d) shares of Common Stock held by Bausch
& Lomb Incorporated and the Founders as of the date of this Agreement.
Registrable Securities shall cease to be Registrable Securities (i) when a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall
<PAGE>

have been disposed of in accordance with such registration statement, (ii) when
such securities shall have been publicly distributed pursuant to an exemption
from the registration requirements of the Securities Act, or (iii) when all of
the Registrable Securities held by a Holder could be sold under Rule 144 in a
three (3) month period.

     For purposes of this Agreement, the number of shares of Registrable
Securities outstanding at any time shall be determined by adding the number of
shares of Common Stock outstanding which are, and the maximum number of shares
of Common Stock issuable pursuant to then convertible or exercisable securities
which upon issuance would be, Registrable Securities.

     "Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

     "Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.

     "Shares" means shares of the Preferred Stock.

     "Stockholder" means the Holders and any persons or entities to whom the
rights granted under this Agreement are transferred, and their successors or
assigns.

                                      -2-
<PAGE>

2.    REQUIRED REGISTRATIONS.

     2.1.    Demand Registrations.  At any time after the earlier of (i) the
date six months after the closing of the first sale of securities by the Company
pursuant to a Registration Statement and (ii) August 8, 2005, a Stockholder or
Stockholders (other than the Founders) holding in the aggregate at least thirty
percent (30%) of the Registrable Shares may request, in writing, that the
Company effect the registration of Registrable Shares held by such Stockholders
as a group if the anticipated gross proceeds of the offering to which such a
Registration Statement applies are at least ten million dollars ($10,000,000).
If the Stockholders initiating the registration intend to distribute the
Registrable Shares in an underwritten offering, they shall so advise the Company
in their request.

     In the event such registration is underwritten, the right of other
Stockholders to participate shall be conditioned on such Stockholders'
participation in such underwriting upon the same terms and conditions (provided
that the terms of the underwriting are consistent with this Agreement).  Upon
receipt of any such request, the Company shall promptly give written notice of
such proposed registration to all Stockholders.  Such Stockholders shall have
the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of their Registrable Shares as such Stockholders may request in such notice of
election; provided that if the underwriter managing the offering determines
that, because of marketing factors, all of the Registrable Shares requested to
be registered may not be included in the offering, then all Stockholders who
have requested registration shall participate in the registration pro rata based
on their total ownership of Registrable Shares.  The Company shall, as
expeditiously as possible, use its best efforts to effect the registration of
all Registrable Shares which the Company has been requested to so register.

                                      -3-
<PAGE>

     2.2.    Registration on Form S-3.  At any time after the Company becomes
eligible to file a Registration Statement on Form S-3 (or any successor form
relating to secondary offerings), a Stockholder or Stockholders may request the
Company, in writing, to effect the registration on Form S-3 (or any successor
form), of all or such portion of the Registrable Shares as the holder or holders
shall specify so long as the anticipated aggregate offering price for such
registration would exceed $2,500,000.  Upon receipt of any such request, the
Company shall promptly give written notice of such proposed registration to all
Stockholders.  If the Stockholders initiating the registration intend to
distribute the Registrable Shares in an underwritten offering, they shall so
advise the Company in their request.  In the event such registration is
underwritten, the right of other Stockholders to participate shall be
conditioned on such Stockholders' participation in such underwriting upon the
same terms and conditions (provided that the terms of the underwriting are
consistent with this Agreement).  Upon receipt of any such request, the Company
shall promptly give written notice of such proposed registration to all
Stockholders.  Such Stockholders shall have the right, by giving written notice
to the Company within 30 days after the Company provides its notice, to elect to
have included in such registration such of their Registrable Shares as such
Stockholders may request in such notice of election; provided that if the
underwriter managing the offering determines that, because of marketing factors
all of the Registrable Shares requested to be registered may not be included in
the offering, then all Stockholders who have requested registration shall
participate in the registration pro rata based on their total ownership of
Registrable Shares. The Company shall, as expeditiously as possible, use its
best efforts to effect the registration on Form S-3 (or any successor form) of
all Registrable Shares that the Company has been so requested to register.

     2.3.  Limitations.  The Company shall not be required to effect more than
two registrations pursuant to Section 2.1 above, nor to effect such a
registration more than once in any twelve-month period. Under Section 2.2 above,
the Stockholder or Stockholders shall have the right to require the Company to
effect an unlimited number of registrations on Form S-3; provided, however, that
in any one year the Company shall not be required to effect more than two such
registrations and any such registration shall be separated from any previous
registration by a period of at least six months. For purposes of this Section
2.3, the obligation to effect a registration pursuant to Sections 2.1 and 2.2
above shall be deemed satisfied only when a registration statement covering the
Registrable Shares included in such registration statement shall have become
effective and, if the method of disposition is a firm commitment underwritten
public offering, all such Registrable Shares shall have been sold pursuant
thereto. The Founders shall not have the rights granted to Stockholders under
Section 2.1.

                                      -4-
<PAGE>

     2.4.  Delay for Good Cause.  If the Company shall furnish to the Initiating
Holders a certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would be
materially detrimental to the Company and its shareholders for such registration
statement to be filed on or before the date filing would be required and it is
therefore essential to defer the filing of such registration statement, then the
Company may direct that such request for registration be delayed for a period of
time not in excess of one hundred eighty (180) days, such right to delay a
request to be exercised by the Company not more than once in any one-year
period.

     2.5.  Selection of Underwriter.  In the case of any registration effected
pursuant to this Section 2, the requesting Stockholders shall have the right to
designate the managing
underwriter, subject to the approval of the Company, which approval may not be
unreasonably withheld or delayed.

3.    INCIDENTAL REGISTRATION.

     3.1.  Company-Initiated Registration.  After the closing of the first sale
of securities by the Company pursuant to a Registration Statement, whenever the
Company proposes to file a Registration Statement, prior to such filing it shall
give written notice to all Stockholders of its intention to do so, and upon the
written request of a Stockholder or Stockholders given within 30 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its best efforts
to cause all Registrable Shares which the Company has been requested to register
to be registered under the Securities Act to the extent necessary to permit
their sale or other disposition in accordance with the intended methods of
distribution specified in the request of such Stockholder(s); provided that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 3.1 without obligation to any Stockholder.

                                      -5-
<PAGE>

     3.2.    Limitations.  In connection with any offering under this Section 3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (provided that the terms of the underwriting are
consistent with this Agreement).  If in the opinion of the managing underwriter,
because of marketing factors, all of the Registrable Securities that
Stockholders have requested to be included may not be included in the offering,
the managing underwriter may reduce the number of shares proposed to be
registered by the Stockholders to a number not less than the number of
Registrable Securities as constitutes thirty-five percent (35%) of all shares
registered in the offering.  In the event of such a reduction in the number of
shares to be included in the underwriting, all Stockholders who have requested
registration shall participate in the underwriting pro rata based upon their
total ownership of Registrable Shares taken in the aggregate and if any such
Stockholder would thus be entitled to include more Registrable Shares than such
Stockholder requested, the excess shall be allocated among such other requesting
Stockholders pro rata based on their proportionate ownership of Registrable
Shares.  No other securities requested to be included in a registration for the
account of anyone other than the Company or the Stockholders shall be included
in a registration unless all Registrable Shares requested to be included in such
registration are so included.

4.    REGISTRATION PROCEDURES.  IF AND WHENEVER THE COMPANY IS REQUIRED BY THE
PROVISIONS OF THIS AGREEMENT TO USE ITS BEST EFFORTS TO EFFECT THE REGISTRATION
OF ANY OF THE REGISTRABLE SHARES UNDER THE SECURITIES ACT, THE COMPANY SHALL:

     4.1.    Filing.  File with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;

     4.2.    Amendments and Supplements   As expeditiously as possible prepare
and file with the Commission any amendments and supplements to the Registration
Statement and the prospectus included in the Registration Statement as may be
necessary to keep the Registration Statement effective for a period of not less
than 180 days from the effective date;

     4.3.    Copies of Prospectus.  As expeditiously as possible furnish to each
selling Stockholder such reasonable numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the selling Stockholder;

                                      -6-
<PAGE>

     4.4.    Blue Sky Qualification.  As expeditiously as possible use its best
efforts to register or qualify the Registrable Shares covered by the
Registration Statement under the securities or Blue Sky laws of such states as
the selling Stockholder shall reasonably request, and do any and all other acts
and things that may be necessary or desirable to enable the selling Stockholder
to consummate the public sale or other disposition in such jurisdictions of the
Registrable Shares owned by the selling Stockholder, as the case may be;
provided, however, that the Company shall not thereby be required to qualify as
a foreign corporation or execute a general consent to service of process in any
jurisdiction;

     4.5.    Underwritten Offering.  In the event that Registrable Shares are
sold pursuant to a Registration Statement in an underwritten offering, enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering;

     4.6.    Opinion of Counsel.  In connection with an underwritten public
offering, furnish to each selling Stockholder a signed counterpart, addressed to
all such selling Stockholders, of an opinion of counsel for the Company
experienced in securities law matters covering substantially the same matters
with respect to the registration statement and the prospectus as are customarily
covered in opinions of issuer's counsel delivered to underwriters in
underwritten public offerings of securities;

     4.7.    Earnings Statement.  Use its best efforts to comply with all
applicable rules and regulations of the Commission and make available to it
security holders, as soon as reasonably practicable, an earnings statement of
the Company (in form complying with the provisions of Rule 158 promulgated under
the Securities Act) covering the period of at least 12 months beginning with the
first month following the effective date of the registration statement;

     4.8.    Listing.  Use its best efforts either to list the Registrable
Shares on a national securities exchange or have them designated as national
market securities by the National Association of Securities Dealers, Inc.
("NASD").

     4.9.  Comfort Letter.  In connection with an underwritten public offering,
furnish a "comfort" letter signed by the Company's independent public
accountants who have examined and reported on the Company's financial statements
included in the Registration Statement covering substantially the same matters
with respect to the registration statement and to events subsequent to the date
of the financial statements as are customarily covered in accountants' "comfort"
letters delivered to the underwriters in underwritten public offerings of
securities.

                                      -7-
<PAGE>

     If the Company has delivered preliminary or final prospectuses to the
selling Stockholder and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the selling Stockholder and, if requested, the selling Stockholder shall
immediately cease making offers of Registrable Shares shall return all
prospectuses to the Company.  The Company shall promptly provide the selling
Stockholder with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholder shall be free to resume making offers of
the Registrable Shares.

     Each holder of Registrable Shares included in any registration shall
furnish to the Company such information regarding such holder and the
distribution proposed by such holder as the Company may request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to in this Section 4.

5.    ALLOCATION OF EXPENSES.  THE COMPANY SHALL PAY THE REGISTRATION EXPENSES
FOR THE TWO REGISTRATIONS REQUESTED BY THE STOCKHOLDERS PURSUANT TO SECTION 2.1,
AND OF ALL REGISTRATIONS PURSUANT TO SECTIONS 2.2 AND 3.  IF A REGISTRATION
REQUESTED BY THE STOCKHOLDERS PURSUANT TO SECTION 2.1 OR SECTION 2.2 IS
WITHDRAWN AT THE REQUEST OF THE STOCKHOLDERS REQUESTING IT (OTHER THAN AS A
RESULT OF INFORMATION CONCERNING THE BUSINESS OR FINANCIAL CONDITION OF THE
COMPANY THAT IS MADE KNOWN TO THE STOCKHOLDERS AFTER THE DATE ON WHICH SUCH
REGISTRATION WAS REQUESTED) AND IF THE REQUESTING STOCKHOLDERS ELECT NOT TO HAVE
SUCH REGISTRATION COUNTED AS A REGISTRATION REQUESTED UNDER SUCH SECTIONS, THE
REQUESTING STOCKHOLDERS SHALL PAY THE REGISTRATION EXPENSES OF SUCH REGISTRATION
PRO RATA IN ACCORDANCE WITH THE NUMBER OF THEIR REGISTRABLE SHARES INCLUDED IN
SUCH REGISTRATION.  ALL OTHER REGISTRATION EXPENSES WILL BE BORNE PRO RATA AMONG
THE REQUESTING STOCKHOLDERS, IN ACCORDANCE WITH THE NUMBER OF THEIR REGISTRABLE
SHARES INCLUDED IN SUCH REGISTRATION, AND THE COMPANY, IF IT PARTICIPATES IN
SUCH REGISTRATION.  FOR PURPOSES OF THIS SECTION, THE TERM "REGISTRATION
EXPENSES" SHALL MEAN ALL EXPENSES INCURRED BY THE COMPANY IN COMPLYING WITH THIS
SECTIONS 2 AND 3, INCLUDING, WITHOUT LIMITATION, ALL REGISTRATION AND FILING
FEES, EXCHANGE OR NATIONAL MARKET LISTING FEES, ALL FEES AND EXPENSES OF
COMPLYING WITH SECURITIES OR BLUE SKY LAWS, ALL FEES AND EXPENSES ASSOCIATED
WITH FILINGS WITH THE NASD, ALL PRINTING EXPENSES, FEES AND DISBURSEMENTS OF
COUNSEL FOR THE COMPANY AND ITS INDEPENDENT PUBLIC ACCOUNTANTS, FEES AND
DISBURSEMENTS OF ONE COUNSEL FOR THE SELLING STOCKHOLDERS RETAINED BY
STOCKHOLDERS HOLDING A MAJORITY OF THE REGISTRABLE SHARES INCLUDED IN A
REGISTRATION AND THE EXPENSE OF ANY SPECIAL AUDITS INCIDENT TO OR REQUIRED BY
ANY SUCH REGISTRATION, BUT EXCLUDING THE PORTION OF THE UNDERWRITING DISCOUNTS
AND SELLING COMMISSIONS ATTRIBUTABLE TO THE REGISTRABLE SHARES BEING OFFERED AND
SOLD THEREIN AND FEES OF MORE THAN ONE COUNSEL FOR THE SELLING STOCKHOLDERS.
SUCH UNDERWRITING DISCOUNTS AND SELLING COMMISSIONS SHALL BE BORNE PRO RATA BY
THE SELLING STOCKHOLDERS IN ACCORDANCE WITH THE NUMBER OF THEIR REGISTRABLE
SHARES TAKEN IN THE AGGREGATE INCLUDED IN SUCH REGISTRATION.

                                      -8-
<PAGE>

6.    INDEMNIFICATION.

     6.1.    Company Indemnification.  In the event of any registration of any
of the Registrable Shares under the Securities Act pursuant to this Agreement,
then to the extent permitted by law, the Company shall indemnify and hold
harmless the seller of such Registrable Shares, its partners, directors,
officers and employees and any fund manager or fiduciary (which persons shall be
deemed to be included in the term seller in this Section 6.1), each underwriter
of such Registrable Shares and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act or the Exchange
Act against any losses, claims, damages or liabilities, joint or several, to
which such seller, underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement under
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company shall reimburse such seller, underwriter
and each such controlling person for any legal or any other expenses reasonably
incurred by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable to any such seller,
underwriter or controlling in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use in
the preparation thereof.

                                      -9-
<PAGE>

     6.2.    Seller Indemnification.  In the event of any registration of any of
the Registrable Shares under the Securities Act pursuant to this Agreement, then
to the extent permitted by law, each seller of Registrable Shares severally and
not jointly, shall indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any) and each person, if any,
who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such seller,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of such Stockholder hereunder shall be limited to an amount equal to
the net proceeds to such Stockholder of Registrable Shares sold as contemplated
herein.

     6.3.    Notice of Claims, etc.  Each party entitled to indemnification
under this Section (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided, that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld or delayed); and, provided, further, that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as a
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a general release from all liability in respect of such claim or litigation,
and no Indemnified Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the Indemnifying Party.

                                      -10-
<PAGE>

     6.4.    Contribution.  If for any reason the foregoing indemnification is
not available, or is insufficient to hold harmless an Indemnified Party, other
than by reason of the exceptions provided herein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the holder of Registrable Shares
and the Company as well as any other equitable considerations including the
parties' relative knowledge and access to information concerning the matter with
respect to which any claim is asserted and the opportunity to correct and
prevent any such statement or omission leading to such loss, claim, damage or
liability (or actions in respect thereof), but not including the relative
benefits received by the holders of Registrable Shares on the one hand and the
Company on the other; provided, however, that in any such case (i) no holder of
Registrable Shares will be required to contribute except to the extent and under
such circumstances as such holder would be required to provide indemnification
hereunder and then only in an amount not in excess of the net proceeds to it of
all Registrable Shares sold in the registration, and (ii) no person guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person who is not so
guilty.

7.    MISCELLANEOUS.

     7.1.  "Stand-Off" Agreement.  Each Stockholder agrees that without the
consent of the managing underwriter it will not, for a period of one hundred
eighty (180) days following the effective date of the registration statement for
the initial public offering by the Company of its equity securities, directly or
indirectly sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any common equity or securities convertible into common equity;
provided, that all officers and directors of the Company and all holders of at
least two percent (2%) of the Company's then-outstanding Common Stock enter into
similar agreements; and provided further, that this Section 7.1 will not apply
to transactions relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the Company's initial public
offering; and provided further, that in the event any Stockholder is released in
whole or in part from such Stockholder's obligations under this Section 7.1,
each other Stockholder shall be proportionally released from such other
Stockholder's obligations under this Section 7.1. The Company may impose stop-
transfer instructions with respect to the Registrable Shares or other securities
subject to the foregoing restriction until the end of the stand-off period.

     7.2.    Rule 144 Requirements.  With a view to making available to the
Stockholders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit such
stockholder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:

                                      -11-
<PAGE>

          (a)  make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act (at any time after
it has become subject to the reporting requirements of the Exchange Act);

          (b)  file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and

          (c)  furnish to any holder of Registrable Shares upon request a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the closing of
the first sale of securities by the Company pursuant to a Registration
Statement), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as such holder may reasonably request to avail itself of any
similar rule or regulation of the Commission allowing it to sell any such
securities without registration.

     7.3.  Mergers.  The Company shall not, directly or indirectly, enter into
any merger, consolidation or reorganization in which the Company is not the
surviving corporation unless the proposed surviving corporation shall, prior to
and as a condition to such merger, consolidation or reorganization, agree in
writing to assume the obligations of the Company under this Agreement; provided,
however, that the provisions of this Section 7.3 shall not apply to any such
merger, consolidation or reorganization in which the consideration to be
received consists solely of (i) cash or evidences of indebtedness or (ii)
securities of the surviving corporation that the surviving corporation has
agreed to register for resale under the Securities Act within 90 days of the
completion of the transaction.

     7.4.  Transfer of Rights.  This Agreement, and the rights and obligations
of each Holder hereunder, may be assigned by such Holder to (i) any person or
entity that acquires at least ten percent (10%) of the Registrable Shares
originally issued to such Holder, or (ii) any general or limited partner or any
officer or director or "affiliate," as defined in Rule 405 promulgated under the
Securities Act, of any Holder, including, but not limited to, members of such
Holder's immediate family, irrevocable trusts for estate planning purposes and
personal representatives; provided, that any such transferee execute a writing
agreeing to be bound by the provisions of this Agreement and be a Stockholder
for all purposes hereunder.

     7.5.  Governing Law.  This Agreement shall be governed in all respects by
the laws of The Commonwealth of Massachusetts without giving effect to the
conflict of laws principles.

                                      -12-
<PAGE>

     7.6.  Entire Agreement; Amendment and Waiver.  This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof. Neither this Agreement nor any term may be
amended, waived, discharged or terminated, except by a written instrument signed
by the Company and Stockholders holding 66 2/3% or more of the Registrable
Shares, but in no event shall any such amendment, waiver, discharge or
termination increase the obligations of any Stockholder hereunder or reduce the
benefits in a manner that treats Stockholders differently, except upon the
written consent of such Stockholder. Copies of such amendment, waiver, discharge
or termination shall be delivered to any Holders who did not execute such
consent. No failure or delay on the part of any party to this Agreement shall in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. Bausch & Lomb Incorporated and the
Founders agree that this Agreement supercedes Section 3 of the Stockholders
Agreement dated as of December 31, 1992 among the Founders, Vincent Manopoli and
Chiron IntraOptics and that such Section 3 shall be terminated, and each party
shall no longer have any rights under such Section 3, as of the date of this
Agreement.

     7.7.  Notices.  All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed effectively given
upon personal delivery or five days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid, addressed to the
Company at its principal office and to a Holder at its address on the records
maintained by the Company or at such other address as any party may designate by
ten days' prior written notice to the other party.

     7.8.  Rights; Separability.  Unless otherwise expressly provided herein,
each Holder's rights hereunder are several rights, not rights jointly held with
any of other Holders. In case any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

     7.9.  Titles. The titles of the Sections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.

     7.10.  Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one Agreement.

                                      -13-
<PAGE>

The undersigned have executed this Agreement under seal as of the date first
above written.

                         CONTROL DELIVERY SYSTEMS, INC.

                         By: /s/ Paul Ashton
                             --------------------------
                         Name:  Paul Ashton
                         Title:  President

                         By: /s/ Thomas J. Smith
                             --------------------------
                         Name:  Thomas J. Smith
                         Title:  Chairman
<PAGE>

          ESSEX WOODLANDS HEALTH VENTURES FUND V, L.P.

                         By: Essex Woodlands Health Ventures V, L.L.C.

                         By: /s/ James L. Currie
                             ----------------------------------
                         Name:  James L. Currie
                         Title:  Managing Director

                         ESSEX WOODLANDS HEALTH VENTURES FUND IV, L.P.
                         By: Essex Woodlands Health Ventures IV, L.L.C.

                         By: /s/ James L. Currie
                             ----------------------------------
                         Name: James L. Currie
                         Title:  Managing Director
<PAGE>

                         CAPITAL RESEARCH AND MANAGEMENT COMPANY,
                         On behalf of

                         SMALLCAP WORLD FUND, INC.

                         By: /s/ Catherine M. Ward
                             ----------------------------------
                         Name: Catherine M. Ward
                         Title: Senior Vice President
<PAGE>

                         BROOKSIDE CAPITAL PARTNERS FUND, L.P.

                         By: /s/ Ed Brakeman
                             ----------------------------------
                         Name: Ed Brakeman
                         Title: Managing Director
<PAGE>

                         ESSEX PRIVATE PLACEMENT FUND III - A
                         ESSEX PRIVATE PLACEMENT FUND III - B

                         By:  Essex Investment Management Company, LLC
                           its General Partner

                         By: /s/ Susan P. Stickells
                             ----------------------------------
                         Name:  Susan P. Stickells
                         Title:  Principal
<PAGE>

                         T. ROWE PRICE NEW HORIZONS FUND, INC.

                         By: /s/ John H. Laporte
                             ----------------------------------
                         Name: John H. Laporte
                         Title: Director

                         T. ROWE PRICE HEALTH SCIENCES FUND, INC.

                         By: /s/ John H. Laporte
                             ----------------------------------
                         Name: John H. Laporte
                         Title: Director
<PAGE>

                         ANVIL INVESTMENT ASSOCIATES, LP
                         By:  Anvil Management Company, LLC
                           its General Partner

                             Anvil Investment Associates L.P.

                         By: /s/ Theodore H. Ashford
                             ----------------------------------
                         Theodore H. Ashford, Member

<PAGE>

                         MORGAN STANLEY DEAN WITTER EQUITY
                         FUNDING, INC.

                         By: /s/ Thomas A. Clayton
                             ----------------------------------
                         Name: Thomas A. Clayton
                         Title: Vice President

                         MORGAN STANLEY DEAN WITTER VENTURE
                            PARTNERS IV, L.P.
                         MORGAN STANLEY DEAN WITTER VENTURE
                            INVESTORS IV, L.P.
                         MORGAN STANLEY DEAN WITTER VENTURE
                            OFFSHORE INVESTORS IV, L.P.

                         By:  MSDW Venture Partners IV, L.L.C.,
                           as General Partner of each of the limited
                           partnerships named above

                         By:  MSDW Venture Partners IV, Inc., as Member

                         By: /s/ Debra Abramovitz
                             ----------------------------------
                         Name:  Debra Abramovitz
                         Title:  Principal
<PAGE>

                         RGIP, LLC

                         /s/ Douglas N. Ellis
                         ----------------------------------
                         Name:  Douglas N. Ellis
                         Title:  Managing Member
<PAGE>

                         /s/ Peter Liley
                         ----------------------------------
                         Peter Liley

                         /s/ Leann Reitzig
                         ----------------------------------
                         Leann Reitzig

                         /s/ Steve Silverman
                         ----------------------------------
                         Steve Silverman

                         /s/ John Bierly
                         ----------------------------------
                         John Bierly

                         /s/ Doug Gaeth
                         ----------------------------------
                         Doug Gaeth

                         /s/ Bob Baker
                         ----------------------------------
                         Bob Baker

                         /s/ Phil McCarthy
                         ----------------------------------
                         Phil McCarthy
<PAGE>

                         /s/ John Reitter
                         ----------------------------------
                         John Reitter

                         /s/ John Slattery, Jr.
                         ----------------------------------
                         John Slattery, Jr.

                         /s/ John Slattery, Sr.
                         ----------------------------------
                         John Slattery, Sr.

                         /s/ Joseph Cannistraro
                         ----------------------------------
                         Joseph Cannistraro

                         /s/ Dean Elliott
                         ----------------------------------
                         Dean Elliott

                         /s/ Abdul R. Piracha
                         ----------------------------------
                         Abdul R. Piracha

                         /s/ John Willadsen
                         ----------------------------------
                         John Willadsen

                         /s/ Alan Perry
                         ----------------------------------
                         Alan Perry

                         /s/ Dr. Edward Wilk
                         ----------------------------------
                         Dr. Edward Wilk
<PAGE>

                         /s/ Thomas DeRosa
                         ----------------------------------
                         Thomas DeRosa

                         /s/ Christina Takoudes Morrison
                         ----------------------------------
                         Christina Takoudes Morrison

                         /s/ Stanley B. Blaylock
                         ----------------------------------
                         Stanley B. Blaylock

                         /s/ Brent B. Milner
                         ----------------------------------
                         Brent B. Milner

                         /s/ David Steinberg
                         ----------------------------------
                         David Steinberg

                         /s/ James P. Scopa
                         ----------------------------------
                         James P. Scopa

                         /s/ Michael H. Cohen
                         ----------------------------------
                         Michael H. Cohen

                         /s/ Greg Parekh
                         ----------------------------------
                         Greg Parekh

                         /s/ Dallas Miller
                         ----------------------------------
                         Dallas Miller
<PAGE>

                         /s/ Richard T. Broglino
                         ----------------------------------
                         Richard T. Broglino

                         /s/ Patricia Rupnow
                         ----------------------------------
                         Patricia Rupnow

                         /s/ Karen Boyd
                         ----------------------------------
                         Karen Boyd

                         /s/ Vincent C. Manopoli
                         ----------------------------------
                         Vincent C. Manopoli
<PAGE>

                         BAUSCH & LOMB INCORPORATED

                         By: /s/ Thomas Riedhammer
                             ------------------------------
                         Name: Thomas Riedhammer
                         Title: Senior Vice President
<PAGE>

                                   SCHEDULE I

Investors

Essex Woodlands Health Ventures Fund V, LP

Essex Woodlands Health Ventures Fund IV, L.P.

SMALLCAP World Fund, Inc.

Brookside Capital Partners Fund, L.P.

Essex Private Placement Fund III-A, L.P.

Essex Private Placement Fund III-B, L.P.

T. Rowe Price New Horizons Fund, Inc.

T. Rowe Price Health Sciences Fund, Inc.

Anvil Investment Associates, LP

Morgan Stanley Dean Witter Equity Funding, Inc.

Morgan Stanley Dean Witter Venture Partners IV, L.P.

Morgan Stanley Dean Witter Venture Investors IV, L.P.

Morgan Stanley Dean Witter Venture Offshore Investors IV, L.P.

RGIP, LLC

Peter Liley

Rolph and Lea Ann Reitzig

Steve Silverman

John Bierly

Jeff Blum

Doug Gaeth
<PAGE>

Bob Baker

Phil McCarthy

John Reitter

John A. Smith, M.D.

John Slattery, Sr.

Joseph Cannistraro

Dean Eliot

Abdul R. Piracha

John Willadsen

Alan Perry

Dr. Edward Wilk

Thomas J. DeRosa

Christina Takoudes Morrison

Stanley B. Blaylock

Brent B. Milner

David Steinberg

James P. Scopa

Michael H. Cohen

Greg Parekh

Dallas Miller

Dr. Patricia Rupnow

Richard T. Broglino
<PAGE>

Bausch & Lomb Incorporated

Paul Ashton

Thomas Smith

Vincent Manopoli

John Slattery, Jr.

Karen J. Boyd

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