Document:

<PAGE>

                                                                  Execution Copy

         AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT, dated as of July 19, 2000,
among IMATEC LTD., a Delaware Corporation with offices located at 150 East 58th
Street, New York, New York 10155 (the "Purchaser"); SEQUEL ACQUISITION
CORPORATION, a Delaware corporation and a wholly-owned, newly-formed subsidiary
of the Purchaser with executive offices located at 150 East 58th Street, New
York, New York 10155 ("Acquisition"); and SEQUEL TECHNOLOGY CORPORATION, a
Washington corporation with executive offices located at 3245 146th Place SE,
Suite 300, Bellevue, Washington 98007 (the "Seller").

                                  INTRODUCTION
                                  ------------

         The parties hereto executed and delivered the original Asset Purchase
Agreement dated as of May 26, 2000 (the "Original Asset Purchase Agreement").
The parties hereto desire to amend the Original Asset Purchase Agreement as set
forth herein.

         The parties hereto, intending to be legally bound, hereby agree as
follows:

I.       AMENDMENT

         Section 1.01 Scope. Except as otherwise set forth in this Article I,
the Original Asset Purchase Agreement shall continue in full force and effect.

         Section 1.02 Amendment.

         (a)      The definition of Employment Agreements in Section 1 of the
Original Agreement is hereby amended to exclude the Employment Agreements
between the Seller and each of Michael Hayes, Tony Zundel, Paul Bouche, and
Robert Savette.

         (b)      Section 3.04 of the Original Asset Purchase Agreement is
hereby amended to be and read in its entirety as follows:

<PAGE>

                  "The authorized capital stock of Purchaser consists of (i)
                  20,000,000 shares of Purchaser Common Stock, of which
                  3,735,201 shares are outstanding, and (ii) 2,000,000 shares of
                  preferred stock, par value $.001 per share, of which no shares
                  are outstanding. The authorized capital stock of Acquisition
                  consists of 1,500 shares of Common Stock of which 10 shares
                  are outstanding and owned by Purchaser. Schedule 3.04 hereof
                  sets forth the capitalization of the Purchaser on a fully
                  diluted basis as of the date dated of this Agreement, the
                  proposed capitalization immediately after the Closing and the
                  proposed capitalization immediately following the proposed
                  public offering. Each of the outstanding shares of Purchaser
                  Common Stock and each outstanding share of capital stock of
                  Acquisition is validly authorized and issued, fully paid, and
                  nonassessable, has not been issued and is not owned or held in
                  violation of any preemptive or similar right of stockholders,
                  and is in each case free and clear of all liens, security
                  interests, pledges, charges, encumbrances, stockholders'
                  agreements, and voting trusts other than those created by the
                  stockholders of Purchaser or with respect to their property
                  but to which neither the Purchaser, nor the officers or
                  directors thereto is a party. Except as set forth in the
                  Purchaser SEC Documents, Schedule 3.04 hereto or Section 8.17
                  hereof, (i) there is no commitment, plan, or arrangement to
                  issue, and no outstanding option, warrant, or other right
                  calling for the issuance of, any share of capital stock of
                  Purchaser or of Acquisition or any security or other
                  instrument convertible into, or exchangeable or exercisable
                  for
<PAGE>

                  capital stock of Purchaser or of Acquisition, and (ii) there
                  is outstanding no security or other instrument convertible
                  into, or exercisable or exchangeable for, capital stock of
                  Purchaser or Acquisition.

         (c)      Section 4.01(a)(i) of the Original Asset Purchase Agreement is
hereby amended to be and read in its entirety as follows:

                  "Acquisition shall cause Purchaser to deliver an aggregate
                  number of shares of Purchaser Common Stock equal to the sum of
                  (A) 15,000,000 and (B) the product obtained by multiplying the
                  dollar amount of the gross proceeds of the private placement
                  of convertible indebtedness currently being conducted by the
                  Seller by 2; at a purchase price of $.50 per share to those
                  creditors of Seller as set forth on Schedule 4.01(a)(i) hereto
                  (the "New Purchaser Shareholders") (a portion of such shares
                  will be deposited in the Escrow Account pursuant to the terms
                  of the Escrow Agreement and Section 4.04 hereof);"

         (d)      Section 4.01(a)(iii) of the Original Asset Purchase Agreement
is hereby amended to be and read in its entirety as follows:

                  "Acquisition shall assume such obligations and liabilities of
                  Seller as are in conformity with the representations and
                  warranties of Seller and are set forth on Schedule
                  4.01(a)(iii) hereof, it being understood that Acquisition is
                  assuming all such liabilities listed on Schedule 4.01(a)(iii)
                  as of March 1, 2000, and shall assume the obligations of the
                  Seller which shall be no less favorable to the Purchaser than
                  those set forth in the terms of the Term Sheet

<PAGE>

                  with Imperial Bank dated as of August __, 2000 and attached
                  hereto as Exhibit 4.01(a)(iii);"

          (e)     Section 4.02 of the Asset Purchase Agreement is hereby amended
to be and read in its entirety as follows:

                  "The closing of the transactions contemplated by Section 4.01
                  shall take place at the offices of Brock Silverstein LLC,
                  counsel to the Purchaser and Acquisition, 800 Third Avenue,
                  21st Floor, New York, New York 10022, at 10:00 a.m., local
                  time, on the fifth business day after the date the conditions
                  in Articles V and VI have been satisfied. The closing may
                  occur at such different place, such different time, or such
                  different date or a combination thereof as the Purchaser and
                  Seller agree in writing. The closing of the transactions
                  contemplated by Section 4.01, is referred to as the "Closing."

         (f)      Article VIII of the Original Asset Purchase Agreement is
hereby amended to add to the end thereof the following Sections, which shall be
and read in their entirety as follows:

                  "Section 8.16 Insurance. At the Closing, the Purchaser shall
                  acquire, and shall maintain for a period of six years
                  following the date of the Closing, a "tail" insurance policy
                  covering the directors and officers of the Purchaser prior to
                  Closing in the amount of $2 million.

                  Section 8.17 Stock Split. Prior to the Closing, the Purchaser
                  shall take all steps to, and shall, effect a two-for-one stock
                  split of the outstanding Purchaser Common Stock held of record
                  prior to the date Closing. The
<PAGE>

                  shares of Purchaser Common Stock issuable upon such stock
                  split may be distributed to holders of record of Purchaser
                  Common Stock prior to the date of Closing following the
                  Closing. The Purchaser shall take all steps required to permit
                  such additional shares of Common Stock to trade on any
                  securities market, exchange, or trading system on which the
                  Purchaser Common Stock shall trade and shall take all actions
                  under state securities or "blue sky" laws relating such
                  issuance, distribution, and trading. Seller hereby agrees that
                  the aforementioned stock split shall be deemed in the ordinary
                  course of business of the Purchaser for the purposes of this
                  Agreement and that the number of shares of Purchaser Common
                  Stock deliverable to, or at the direction of, the Seller
                  pursuant to Article IV hereof shall not be subject to
                  adjustment as a result of such stock split.

                  Section 8.18 Preferred Stock. Prior to the Closing, the
                  Purchaser shall take all steps to, and shall, create a class
                  of preferred stock substantially with the terms attached
                  hereto as Exhibit 8.18."

         Section 1.03 Waivers.

         (a)      The Purchaser and Acquisition each hereby waives all
conditions to Closing.

         (b)      The Seller hereby waives all conditions to closing.

         Section 1.04 Pre-Closing; Closing; Post Closing Matters.

         (a)      The parties hereto hereby agree to proceed to Closing as soon
as reasonably practicable.

<PAGE>

         (b)      The parties hereby agree to take all actions required after
the date hereof in order to satisfy any condition to Closing which remains
unsatisfied as of the date hereof, as well as to comply with applicable law.

         (c)      Until Closing, the Purchaser will finance the semi-monthly
operating requirements of the Seller until and including such date, provided
that the monthly rate of such operating requirements shall not exceed $100,000
per month.

         Section 1.05 Release.

         The Seller fully and unconditionally releases and discharges all claims
and causes of action which it or its successors (if applicable), or assigns ever
had, now have, or hereafter may have against the Purchaser and/or Acquisition,
and their respective officers, directors, employees, counsel, agents, and
stockholders, in each case past, present, or as they may exist at any time after
this date, and each person, if any, who controls, controlled, or will control
any of them within the meaning of Section 15 of the Securities Act of 1933, as
amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended, in
connection with any and all matters relating to the financing and the
acquisition of the assets of Sequel Technology Corporation, a Washington
corporation, and or its affiliates, thereby, as contemplated by the Original
Asset Purchase Agreement.

II.      MISCELLANEOUS

         The provisions of Article IX of the Asset Purchase Agreement are hereby
incorporated herein by reference as if stated verbatim herein.

<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.

                                   IMATEC LTD.

                                   By:
                                      ------------------------------------------
                                      Name:  Dr. Hanoch Shalit
                                      Title: President, Chief Executive Officer
                                             & Chairman of the Board

                                   SEQUEL ACQUISITION
                                   CORPORATION

                                   By:
                                      ------------------------------------------
                                      Name:  Dr. Hanoch Shalit
                                      Title: President, Chief Executive Officer
                                             & Chairman of the Board

                                   SEQUEL TECHNOLOGY
                                   CORPORATION

                                   By:
                                      ------------------------------------------
                                      Name:  Ronald Bernbaum
                                      Title: Chairman of the Board of Directors

<PAGE>

Exhibit 4.01(a)(iii)
--------------------

Intentionally omitted.

<PAGE>

Exhibit 8.18
------------

                    CERTIFICATE OF DESIGNATION, PREFERENCES,
                            RIGHTS, AND LIMITATIONS
                                       OF
                      SERIES A CONVERTIBLE PREFERRED STOCK
                                       OF
                                  IMATEC LTD.

         Pursuant to Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), IMATEC LTD., a Delaware corporation (the "Corporation"),
does hereby certify that:

         FIRST: The Corporation was incorporated in the State of Delaware on
September 20, 1995 and the authorized number of shares of Preferred Stock, par
value $0.0001 per share, of the Corporation is 2,000,000, none of which is
outstanding prior to the filing hereof;

         SECOND: Pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation and by the provisions of
Sections 141 and 151 et seq of the DGCL, the Board of Directors, by unanimous
written consent in lieu of a meeting in accordance with Section 141(f) of the
DGCL, adopted the following resolutions authorizing the issuance of an aggregate
of 500,000 shares of Series A Preferred Stock (as described below), which
resolutions are still in full force and effect and are not in conflict with any
provisions of the Certificate of Incorporation or By-Laws of the Corporation:

                  WHEREAS, the Board of Directors of the Corporation is
         authorized, within the limitations and restrictions stated in the
         Certificate of Incorporation, to fix by resolution or resolutions the
         designation of each series of preferred stock and the powers,
         preferences, and relative participating, optional, voting or other
         special rights, and the qualifications, limitations, or restrictions
         thereof; and

                  WHEREAS, it is the desire of the Board of Directors of the
         Corporation, pursuant to its authority as aforesaid, to fix the terms
         of one series of preferred stock;

                  NOW, THEREFORE, BE IT RESOLVED, that pursuant to authority
         vested in the Board of Directors of the Corporation by Section 151 of
         the DGCL, and in accordance with the provisions of the Certificate of
         Incorporation of the Corporation, one series of preferred stock, par
         value $0.0001 per share, of the Corporation be and hereby is created
         and provided for with the terms, designation, relative rights,
         preferences, and limitations as follows:

1.       Definitions.
         -----------

         Common Stock. Common stock, par value $0.0001 per share, of the
         Corporation.

<PAGE>

         Conversion Price. $0.50 per share, subject to adjustment a provided in
         paragraph 6(c) hereof, and, after any such adjustment, the Conversion
         Price as theretofore adjusted.

         Liquidation. The event of any voluntary or involuntary liquidation,
         dissolution, or winding up of the Corporation.

         Reorganization. As defined in Section 6(d) hereof.

         Securities Act. Securities Act of 1933, as amended.

         Series A Preferred Stock. The Series A Convertible Preferred Stock, par
         value $0.0001 per share.

         Stated Value. $5.00 per share.

2.       Designation and Number of Shares. The series of preferred stock
established hereby shall consist of 500,000 shares and shall be designated
"Series A Convertible Preferred Stock, par value $0.0001 per share".

3.       Dividends. Subject to Section 6 hereof, dividends on the Series A
Preferred Stock shall be non-cumulative and shall be payable as and when
declared by the Board of Directors in its sole and absolute discretion,
provided, however, that such dividends shall, in all events, be equal to, or
greater than, and shall be prior in right of payment to, any dividends payable
on the Common Stock.

4.       Voting. Each share of Series A Preferred Stock shall be entitled to
vote on all matters submitted to the stockholders of the Corporation and shall
vote together with the Common Stock as one class. Each share of Series A
Preferred Stock shall have such number of votes as shall equal the quotient of
(a) the Stated Value divided by (b) the Conversion Price. Notwithstanding the
foregoing with respect to each of the following events, in lieu of the foregoing
voting rights, the Series A Preferred Stock shall be entitled to vote as a
separate class, and not as one class with, the Common Stock and such events
shall require the affirmative vote thereon by the holders of a majority of the
outstanding Series A Preferred Stock, as well as the affirmative vote of the
holders of Common Stock if and as required by law: (a) any action which (i)
prejudicially alters or amends the terms, relative rights, preferences, and
limitations of the Series A Preferred Stock; and (ii) creates any series of
preferred stock ranking prior to, or on parity with, the Series A Preferred
Stock in right of payment of dividends or liquidation preference; and (b) any
action which, by law, requires the holders of the Series A Preferred Stock to
vote as a single class on matters subject to class vote.

5.       Liquidation Rights. The Series A Preferred Stock shall be treated on an
as converted basis with the Common Stock.

6.       Conversion. (a) Immediately upon the amendment of the certificate of

<PAGE>

incorporation of the Corporation to increase the capitalization thereof to
include a sufficient number of shares of Common Stock to permit the conversion
in full of the Series A Preferred Stock, each share of Series A Preferred Stock
shall be automatically converted into the number of shares of Common Stock equal
to the quotient of (a) the Stated Value divided by (b) the Conversion Price,
provided, that, in the event that such quotient shall result in any fractional
share, such number of shares shall be rounded to the next whole number of
shares. Notwithstanding the foregoing, in the event that the amendment of the
certificate of incorporation of the Corporation shall not take place and be
effective on or prior to January 31, 2001, the Conversion Price shall decrease
by 20% per month or portion thereof thereafter until such amendment shall take
place and be effective, provided that in no event shall the Conversion Price be
less than the par value per share of Common Stock. The preceding sentence does
not apply to any shares of Series A Preferred Stock held by Sequel Technology
Corporation ("Sequel"), a Washington corporation, as either the beneficial or
record holder, or held by any person or entity either controlling, or controlled
by, Sequel.

         (b)      Upon such conversion, all amounts otherwise payable with
respect to the Series A Preferred Stock shall be deemed paid in full by the
issuance of such shares of Common Stock. Upon the conversion thereof in
accordance with this Section 6, the shares of Series A Preferred Stock shall be
canceled and shall become authorized, but unissued, shares of capital stock of
the Corporation.

         (c)      In the event that the Corporation shall at any time after the
date of the issuance of any shares of Series A Preferred Stock (A) declare a
dividend on the outstanding Common Stock payable in shares of its capital stock,
(B) subdivide the outstanding Common Stock, (C) combine the outstanding Common
Stock into a smaller number of shares, or (D) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing corporation), then, in each case, the Conversion
Price at the time of the record date for the determination of stockholders
entitled to receive such dividend or distribution or of the effective date of
such subdivision, combination, or reclassification shall be adjusted so that it
shall equal the Conversion Price theretofore in effect multiplied by a fraction,
the numerator of which shall equal the number of shares outstanding immediately
prior to the effective date of such event and the denominator of which shall
equal the number of shares outstanding immediately following the effective date
of such event.

         (d)      In case of any capital reorganization, other than in the cases
referred to in paragraph (c) of this Section 6, or the consolidation or merger
of the Corporation with or into another corporation (other than a merger or
consolidation in which the Corporation is the continuing corporation and which
does not result in any reclassification of the outstanding shares of Common
Stock or the conversion of such outstanding shares of Common Stock into shares
of other stock or other securities or property), or in the case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety (such
actions being hereinafter collectively referred to as "Reorganizations"), there
shall thereafter be deliverable upon conversion of each share of Series A
Preferred Stock (in lieu of the number of shares of Common Stock theretofore

<PAGE>

deliverable) the number of shares of stock or other securities or property to
which a holder of the respective number of shares of Common Stock which would
theretofore have been deliverable upon the conversion of such share of Series A
Preferred Stock would have been entitled upon such Reorganization if such share
of Series A Preferred Stock had been converted immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Corporation, shall be
made in the application of the provisions herein set forth with respect to the
rights and interests of the holders of the Series A Preferred Stock so that the
provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon conversion of the Series A Preferred Stock. Any such adjustment shall be
made by, and set forth in, a supplemental agreement between the Corporation, or
any successor thereto, and the holders of the Series A Preferred Stock, and
shall for all purposes hereof conclusively be deemed to be an appropriate
adjustment. The Corporation shall not effect any such Reorganization unless,
upon or prior to the consummation thereof, the successor corporation, or if the
Corporation shall be the surviving corporation in any such Reorganization and is
not the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the capital stock of the Corporation
outstanding at the effective time thereof, then such issuer, shall assume by
written instrument the obligation to deliver to the holders of the Series A
Preferred Stock such shares of stock, securities, cash, or other property as
such holders shall be entitled to purchase in accordance with the foregoing
provisions.

         (e)      In case of any reclassification or change of the shares of
Common Stock or other securities issuable upon conversion of the Series A
Preferred Stock (other than a change in par value or from a specified par value
to no par value, or as a result of a subdivision or combination, but including
any change in the shares into two or more classes or series of shares), or in
case of any consolidation or merger of another corporation into the Corporation
in which the Corporation is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock or other securities issuable upon
conversion of the Series A Preferred Stock (other than a change in par value, or
from no par value to a specified par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more classes or
series of shares), each share of Series A Preferred Stock shall thereafter be
convertible into solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation, or merger by a holder of the number of
shares of Common Stock for which such share of Series A Preferred Stock might
have been exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in this Section 6.

<PAGE>

         (f)      The adjustment provided by paragraph (c) of this Section 6
shall be made successively whenever any event listed above shall occur and shall
become effective at the close of business on such record date or at the close of
business on the date immediately preceding such effective date, as applicable.
The provisions of paragraphs (d) and (e) of this Section 6 shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.

<PAGE>

7.       Parity of Treatment.

         Except as otherwise provided herein, the Corporation shall, for all
purposes, including for purposes of distributions, treat each share of Series A
Preferred Stock as if it were, prior to such time, converted into the number of
shares of Common Stock determined pursuant to Section 6 hereof.

8.       Miscellaneous.

         (a)      Closing of Transfer Books. To facilitate the payment of any
dividend with respect to the Series A Preferred Stock or any Liquidation, the
Board of Directors of the Corporation is authorized, but not required, to set a
record date not earlier than 60 days and not later than 10 days prior to the
date of the distribution, in the case of a dividend or a Liquidation, as the
case may be.

         (b)      Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested or by Federal Express, Express Mail, or
similar overnight delivery or courier service or delivered (in-person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to whom it is to be given, in the case of the holders of the Series A
Preferred Stock, at the address of each such holder set forth in the stock
transfer ledger of the Corporation, or, in the case of the Corporation, at 150
East 58th Street, New York, New York 10155. Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof. Any notice given by other means permitted by this paragraph 8(a) shall
be deemed given at the time of receipt thereof.

                [THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the President and attested by its Secretary this____ day of July,
2000.

                                   IMATEC LTD.

                                   By:
                                       -----------------------------------------
                                       Name:  Hanoch Shalit
                                       Title: President

ATTEST:

--------------------------------
Name:
Title: Secretary<PAGE>

                ASSIGNMENT, ASSUMPTION AND FORBEARANCE AGREEMENT
                ------------------------------------------------

         This Assignment, Assumption and Forbearance Agreement (this
"Agreement"), dated as of October 20, 2000 is entered into by IMATEC LTD., a
Delaware Corporation ("Imatec") and SEQUEL ACQUISITION CORPORATION, a Delaware
Corporation and wholly owned subsidiary of Imatec ("SAC" and together with
Imatec "Assignees"), SEQUEL TECHNOLOGY CORPORATION, a Washington Corporation
("Assignor"), and IMPERIAL BANK ("Bank"). (Bank, Assignor, and Assignees may
collectively be referred to hereinafter as "Parties.")

                                    RECITALS
                                    --------

         A.       Assignor and the Bank have entered into that certain Loan and
Security Agreement dated as of July 10, 1997 which has been amended five times
("Loan Agreement") together with that Collateral Assignment, Patent Mortgage and
Security Agreement of the same date, and the Warrant to Purchase Stock issued as
of March 8, 1999 and all government filings to perfect the Bank's security
interests in Collateral, and all other documents, amendments or modifications
entered into or prepared in connection with these documents (collectively the
"Loan Documents") pursuant to which the Bank made a loan to the Borrower.
Capitalized terms used herein and not defined shall have the meanings assigned
to such terms in the Loan Documents. True and complete copies of the Loan
Agreement, Collateral Assignment, Patent Mortgage and Security Agreement and
Warrant to Purchase Stock have been furnished by Assignor to Assignees and by
this reference are incorporated herein.

         B.       Bank has a fully perfected security interest in its
Collateral, which consists of substantially all of Assignor's assets.

                  (a)      The principal amount of the Loans on the date hereof
is SEVEN HUNDRED FIFTY-TWO THOUSAND NINE HUNDRED THIRTY DOLLARS AND FORTY CENTS
($752,930.40). ASSIGNOR IS IN DEFAULT WITH RESPECT TO ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS ON VARIOUS GROUNDS, INCLUDING WITHOUT LIMITATION THE MATURITY OF
THE LOANS ON JANUARY 5, 2000, WHICH DEFAULTS HAVE NOT HERETOFORE BEEN CURED BY
ASSIGNOR OR WAIVED BY BANK, AND BANK HAS NO DUTY TO ADVANCE ANY FUNDS WHATSOEVER
UNDER THE LOAN DOCUMENTS OR OTHERWISE.

         C.       Assignees desire to acquire substantially all of the assets of
Assignor (the "Assets").

         D.       Assignees have reviewed the Loan Documents and all other
documents relating to Assignor's relationship with Bank and the amounts due Bank
by Assignor. Assignees have had a full opportunity to inquire of Bank of any and
all matters relating to the amounts due the Bank under the Loan Documents.

         E.       In connection with the foregoing, Assignor desires to assign
all its rights and obligations under the Loan Documents (the "Assigned
Agreements") to Assignees and Assignees desire to assume and accept all of
Assignor's rights and obligations under the Assigned Agreements on the terms and
conditions set forth below.

                                      -1-
<PAGE>

         F.       Assignees and Assignor want Bank to consent to the assignment
described in "D" above.

         Accordingly, the Parties hereto agree as follows:

                                   AGREEMENT
                                   ---------

         Section 1.  Recitals. Assignor and Assignees (Assignees and Assignor
may hereafter be collectively referred to as "Obligors") agree, represent, and
warrant that the forgoing Recitals are true and correct.

         Section 2.  Assignment. Assignor hereby assigns and transfers to
Assignees all of Assignor's obligations under, and right, title and interest in,
the Assigned Agreements, provided that Assignor shall remain jointly and
severally liable with Assignees with respect thereto following such assignment,
except as provided in Section 10(b) hereof.

         Section 3.  Assumption and Acceptance. Assignees hereby accept the
aforementioned assignment and hereby assume the rights and obligations under,
and agree to be bound by, the Assigned Agreements, provided that Assignor shall
remain jointly and severally liable with Assignees with respect thereto, except
as provided in Section 10(b) hereof.

         Section 4.  Consent by Bank. Bank hereby consents, on and pursuant to
the terms of this Agreement, to (i) the assignment to and assumption by
Assignees of the Loan and the Loan Documents and (ii) the transactions
contemplated by the Transaction Documents referred to below, provided, however,
that notwithstanding any term of the Transaction Documents to the effect that
the Assets will be purchased by Assignees "free and clear" of all Liens, the
Collateral and any other Assets shall be acquired by Assignees subject to the
Liens in favor of Bank pursuant to the Loan Documents.

         Section 5.  Representations and Warranties of Assignor. Assignor
represents and warrants for the benefit of Assignees and the Bank as set forth
below.

                  (a)      Assignor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington.

                  (b)      The execution, delivery and performance by the
Assignor of this Agreement and any other agreements or documents executed in
connection herewith (including, but not limited to the Asset Purchase Agreement
dated as of May 26, 2000 and all documents related thereto) (collectively, the
"Transaction Documents") to which it is a party are within Assignor's corporate
powers, have been duly authorized by all necessary corporate action and do not
contravene (i) Assignor's charter documents or bylaws, or (ii) any applicable
governmental rule or contractual restriction binding on or affecting Assignor.

                  (c)      No governmental action is required for the due
execution, delivery or performance by Assignor of this Agreement or the
Transaction Documents, or the due performance by Assignor of the Loan Documents.

                                      -2-
<PAGE>

                  (d)      Each Transaction Document to which Assignor is a
party is a legal, valid and binding obligation of Assignor enforceable against
Assignor in accordance with its terms. Following the effectiveness of this
Agreement, each Loan Document will remain the legal, valid and binding
obligation of Assignor enforceable against Assignor in accordance with its
terms.

                  (e)      There is no pending or, to the best knowledge of
Assignor, threatened action or proceeding affecting Assignor or any of its
subsidiaries before any governmental person or arbitrator that may materially
and adversely affect the financial condition or operations of Assignor or any
such subsidiary or that purports to affect the legality, validity or
enforceability of any Loan Document or Transaction Document.

                  (f)      All representations and warranties contained in the
Loan Documents are true and correct as of the date of this Agreement, except for
the representations and warranties contained in Section 7(g)(ii) of the Loan
Agreement.

                  (g)      All of the Loan Documents are in full force and
effect, Assignor has no defenses to or rights of offset against any of its
obligations thereunder, Bank has performed all of its obligations thereunder to
this date, and Borrower has no claims against Bank in connection with the Loans,
the Loan Documents, or Bank's dealings with Borrower or its shareholders.

                  (h)      Assignor is entering into all of the transactions
described in this Agreement in good faith, following arms-length negotiations,
and without an intent to hinder, delay or defraud any of its creditors. Assignor
believes that will receive reasonably equivalent value in exchange for its
transfer of the Assets and incurrence of its obligations hereunder.

         Section 6.  Representations and Warranties of Assignees. Assignees
represent and warrant for the benefit of Assignor and the Bank as set forth
below.

                  (a)      Assignees are corporations duly organized, validly
existing and in good standing under the laws of the State of Delaware.

                  (b)      The execution, delivery and performance by the
Assignees of this Agreement, the Loan Documents, and each Transaction Document
to which either is a party are within Assignees' corporate powers, have been
duly authorized by all necessary corporate action and do not contravene (i)
Assignees' charter documents or bylaws, or (ii) any applicable governmental rule
or contractual restriction binding on or affecting Assignees.

                  (c)      No governmental action is required for the due
execution, delivery or performance by Assignees of this Agreement or any
Transaction Document to which either is a party, or the due performance by
Assignees of any Loan Document to which either shall be, upon the effectiveness
of this Agreement, a party.

                  (d)      Each Transaction Document to which Assignees are a
party, and each Loan Document, to which Assignees shall be, upon the
effectiveness of this Agreement, a party, is a legal, valid and binding
obligation of Assignees enforceable against Assignees in accordance with its
terms.

                                      -3-
<PAGE>

                  (e)      Except for the Apple Litigation (as hereinafter
defined), there is no pending or, to the best knowledge of Assignees, threatened
action or proceeding affecting Assignees or any of their respective subsidiaries
before any governmental person or arbitrator that may materially and adversely
affect the financial condition or operations of Assignees or any such subsidiary
or that purports to affect the legality, validity or enforceability of any
Transaction Document or Loan Document. Assignees have provided Bank an accurate
and materially complete description of all litigation (including any and all
arbitration proceedings, appeals, administrative proceedings, and other similar
actions or proceedings) between Imatec and Apple Computers (collectively, the
"Apple Litigation").

                  (f)      Assignees have filed all federal, state and local
income tax returns required to have been filed thereby and have paid all taxes,
assessments, charges and other amounts due thereunder, except to the extent
disputed by appropriate proceedings diligently pursued and to the extent that
appropriate reserves are being maintained with respect to any amounts so
disputed.

                  (g)      As of the date of this Agreement, Assignees do hereby
make all of the representations and warranties contained in the Loan Documents
and confirm that the same are true and correct as applied to Assignees, except
for the representations and warranties contained in Section 7(g)(ii) of the Loan
Agreement.

                  (h)      Assignees contemplate that the assets of Assignor
will first be transferred to SAC and then transferred to Imatec. Assignees
represent and warrant that Bank shall maintain its first priority, fully
perfected security interest in its Collateral at all times when the Collateral
is transferred to Assignees.

                  (i)      Assignees are entering into all of the transactions
described in this Agreement in good faith, following arms-length negotiations,
and without an intent to hinder, delay or defraud any of their creditors. Each
of Assignees believe that it will receive reasonably equivalent value in
exchange for its purchase of the Assets, its assumption of the Loan and Loan
Documents, and incurrence of its obligations hereunder.

                  (j)      Notwithstanding any term of the Loan Documents to the
contrary, Bank agrees that the "Patents, Trademarks, Et Cetera Assigned to Dr.
Hanoch Shalit" and set forth on Schedule 6(i) hereto shall not be subject to
Bank's Lien.

         Section 7.  Forbearance of Enforcement and Modification of the Loan
Documents. Subject to satisfaction of the "Continuing Conditions Precedent" set
forth in Section 9 hereof, Bank agrees as follows:

                  (a)      To forbear from exercising its rights under the Loan
Documents, and on account of the continuing Events of Default thereunder, to:

                  (i)      take possession of or foreclose, sell or otherwise
         dispose of any of the Collateral;

                  (ii)     commence suit on the Loans;

                                      -4-
<PAGE>

                  (iii)    petition for the appointment of a receiver or trustee
         for Borrower or its assets; or

                  (iv)     institute a bankruptcy, reorganization, liquidation,
         insolvency or other similar proceeding against Borrower,

provided, however, that nothing contained herein shall prevent the Bank from
taking any action it may deem necessary in good faith to protect the Collateral
against loss, dissipation or waste. The forbearances contained herein are
specific as to content and time, and do not waive any rights or remedies that
Bank may have as a result of Assignor's Events of Default or any other breaches
or violations past, present, or future of the Loan Documents or any other
agreement between Obligors and Bank, and Bank reserves all rights, powers and
remedies available to it.

                  (b)      To extend the Facility-A Maturity Date and the
Facility-B Maturity Date to October 15, 2001 (the "Extended Maturity Date").

                  (c)      To waive its right, for the period from the date
hereof through the Extended Maturity Date, to collect interest on the Loan at a
rate per annum in excess of two and one-half percent (2.5%) per annum in excess
of the Prime Rate.

                  (d)      To waive its right to the $25,000 fee described in
"Amendment #5 to the Loan and Security Agreement" dated December 27, 1999
included in the Loan Documents.

         Section 8.  Warrant. Imatec agrees to issue to Bank and, subject to
satisfaction of the "Initial Conditions Precedent" set forth in Section 9
hereof, Bank agrees to accept from Imatec a warrant to purchase 376,465 shares
of Imatec common stock (the "Imatec Warrant"). The Imatec Warrant shall be on
Bank's usual form (which shall include, among other things, a net exercise
provision and anti-dilution protection) and shall have a seven (7) year
maturity. In consideration for the Imatec Warrant, Bank agrees to cancel the
warrants previously issued to it by Assignor and waive and release the
approximately $93,000 in fees and approximately $36,000 of penalty interest owed
to Bank under the Loan Documents as of the date hereof.

         Section 9.  Conditions Precedent.
                     --------------------

                  (a)      Initial Conditions Precedent. This Agreement shall
not be binding on Bank unless each of the following conditions precedent shall
be satisfied:

                  (i)      Bank shall have received a $60,000 payment from a
         third party that is not "insolvent" (as such term is defined in Section
         101(32) of the U.S. Bankruptcy Code, 11 U.S.C. Sec. 101 et seq. (the
         "Bankruptcy Code")), which payment shall be applied by Bank first to
         non-penalty interest and then to the principal amount of the Loan.

                  (ii)     All Parties hereto shall have executed and delivered
         this Agreement on or before October 20, 2000, or such later date as
         Bank may agree in writing.

                                      -5-
<PAGE>

                  (iii)    Imatec shall pay $3,000 of Bank's unpaid legal fees
         and costs relating to this Agreement and the Loans and accrued through
         the date hereof (regardless of when such fees and costs may be billed
         to Bank). Such legal fees and costs shall not exceed $17,000.00 and are
         referred to in this Agreement as the "Accrued Legal Fees".

                  (b)      Continuing Conditions Precedent. This Agreement shall
cease to be binding on Bank if any of the following continuing conditions
precedent shall not be satisfied:

                  (i)      On the first day of each month, commencing January 1,
         2001 and until the Loans are paid in full, Assignees shall pay Bank
         $35,000. Such payments shall be applied first to accrued unpaid
         interest on the Loans, calculated at a variable rate per annum equal to
         two and one-half percent (2.5%) per annum in excess of the Prime Rate,
         and second to the Bank's costs and expenses and the principal amount of
         the Loans.

                  (ii)     Within five (5) days after the date on which Obligors
         close any equity or secondary offering of securities that occurs after
         the date hereof (and until the Loans are paid in full), Assignees shall
         pay Bank an amount calculated on the following basis:

<TABLE>
<CAPTION>

         ------------------------------------ -----------------------------------------------------------
<S>                                          <C>
         Aggregate Amount of Financings:      Amount to be Paid to Bank:
         ------------------------------------ -----------------------------------------------------------
         $1 to $849,999                       All unpaid Accrued Legal Fees
         ------------------------------------ -----------------------------------------------------------
         $850,000 to $1,249,999               All unpaid Accrued Legal Fees plus 7% of the Aggregate
                                              Amount of Financings in excess of $850,000
         ------------------------------------ -----------------------------------------------------------
         $1,250,000 to $1,999,999             All unpaid Accrued Legal Fees plus $110,000
         ------------------------------------ -----------------------------------------------------------
         $2,000,000 to $2,999,999             All unpaid Accrued Legal Fees plus $145,000
         ------------------------------------ -----------------------------------------------------------
         $3,000,000 or More                   All unpaid Accrued Legal Fees plus $175,000 plus 10% of
                                              the Aggregate Amount of Financings in excess of $3,000,000
         ------------------------------------ -----------------------------------------------------------

</TABLE>

         For purposes of the left column of the foregoing table, all equity
         and/or secondary offerings of securities that occur after the date
         hereof shall be aggregated, and the phrase "equity and/or secondary
         offerings of securities" shall be broadly construed. For purposes of
         the right column of the foregoing table, all amounts previously paid to
         Bank shall be credited against the indicated "Amount to be Paid to
         Bank". For example, if Obligors close a financing for $500,000 and then
         close a second financing for an additional $1,600,000, then Borrower
         shall pay Bank (A) all unpaid Accrued Legal Fees within five days after
         the first financing and (B) $145,000 within five days after the second
         financing (based on the $2,100,000 aggregate amount of such
         financings).

                                      -6-
<PAGE>

                  (iii)    As additional security for the Loans, Assignees shall
         grant Bank a first priority Lien on all of their assets now owned or
         hereafter acquired, including but not limited to: accounts receivable,
         inventory, and equipment; all registered and unregistered patents,
         licenses, trademarks, copyrights; all intellectual property; and any
         other general intangibles. Such Lien shall be pursuant to one or more
         new security agreements on Bank's usual form(s), which shall be
         executed as soon as possible, and in any event within seven (7) days
         following the date hereof.

                  (iv)     If so requested by Bank, all of Obligors'
         unregistered Copyrights, Patents, Trademarks or other registerable
         intangibles shall be filed or registered with the appropriate federal
         agencies within four weeks after such request by Bank. Obligors and
         Bank legal counsel will coordinate efforts to cause Bank's Lien on such
         intellectual property to be fully perfected and enforceable at the
         appropriate federal agencies.

                  (v)      Obligors shall timely execute (and in any event
         within two (2) business days of being requested by Bank to do so) all
         UCC-1's and UCC-2's requested by Bank at any time and from time to time
         and in form and substance satisfactory to Bank. Obligors also shall
         cause Bank's interest in applicable Collateral to be recorded with the
         Patent & Trademark Office or Copyright Office as applicable.

                  (vi)     Obligors shall at all times from and after January 1,
         2001 maintain their primary bank and transaction accounts at Bank.

                  (vii)    Imatec shall submit or provide to Bank: (A) monthly
         P/L, balance sheet, cash flow information, and monthly agings of
         accounts receivable and accounts payable (all such monthly financial
         information to be supplied within 30 days after the end of each month),
         together with any other information that Bank may reasonably request
         from time to time; (B) a Compliance Certificate (within 30 days after
         the end of each month); and (C) unqualified (except for any
         qualification for Imatec being a "going concern") audited financial
         statements must be submitted (within 90 days after each fiscal year
         end).

                  (viii)   [Intentionally omitted]

                  (ix)     The absence of any of the following relating to each
         of the Obligors or any of their assets: (A) an assignment for the
         benefit of creditors; (B) the appointment of a trustee or receiver; (C)
         the commencement of any voluntary or involuntary bankruptcy,
         reorganization, liquidation, insolvency or dissolution proceedings; (D)
         any execution or writ of process shall be issued under any action or
         proceeding whereby any of the Collateral may be taken or restrained; or
         (E) any Obligor shall consent to any of the foregoing, whether or not
         instituted or commenced. but not limited to all legal, escrow and
         collateral audit examination fees.

                  (x)      Bank shall not deem itself insecure. Bank shall be
         entitled to deem itself insecure if any event occurs, fails to occur,
         or is threatened, or if a condition exists or is threatened, that
         significantly impairs or would significantly impair the value of the
         Collateral, including without limitation the failure of Assignees from
         and after November 1, 2000 to maintain insurance on the Collateral in
         accordance with the Agreement to Provide Insurance dated as of July 10,
         1997.

                                      -7-
<PAGE>

                  (xi)     Assignees shall pay all remaining amounts due and
         owing Bank under the Loan Documents on or before the Extended Maturity
         Date.

Provided, however, that the breach of any of such continuing conditions
precedent shall not effect a rescission of this Agreement.

         Section 10. Releases.
                     --------

                  (a)      Release of Bank by Obligors. As a material inducement
to Bank's decision to grant the above forbearances, Obligors, their affiliates,
and their respective owners, stockholders, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, and attorneys (the
"Releasing Parties") hereby release and forever discharge Bank, its affiliates,
and their respective owners, stockholders, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, and attorneys (the
"Released Parties") from, any and all claims, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts and expenses of
any nature whatsoever, known or unknown, suspected or unsuspected, which the
Releasing Parties at any time may have, own or hold, or claim resulting from any
action or omission by such person in connection with or relating to the Loans
prior to the signing of this Agreement.

         The Releasing Parties agree and acknowledge that they are familiar with
Section 1542 of the California Civil Code, which reads as follows:

                  "A general release does not extend to claims which the
                  creditor does not know or suspect to exist in his favor at the
                  time of executing the release, which if known by him must have
                  materially affected his settlement with the debtor."

The Releasing Parties hereby abandon, release, waive and relinquish all of the
rights and benefits which they have, or may have, under Section 1542 of the
California Civil Code, as well as any similar rights and benefits which it has
by virtue of any similar statute or rule of law in any other state of the United
States.

                  (b)      Release of Assignor by Bank. Bank hereby agrees that
Assignor shall be immediately and fully released from all obligations under the
Assigned Agreements, as if Assignor had paid in full all money owed to Bank with
respect thereto, upon the effectiveness (for all purposes and as between the
Parties and all other persons (including any person that obtains the status of a
bona fide purchaser, whether or not such a person exists)) of (i) the transfer
of all of Assignor's property to Assignees and (ii) the perfection of Bank's
security interest in the Collateral in the hands of Assignees (to the extent
Bank's security interest in the Collateral is not already or automatically
perfected in the hands of Assignees) with the same priority as Bank's security
interest in the Collateral in the hands of Assignor. The release by Bank is a
release in personam only, and not in rem.

                                      -8-
<PAGE>

         Section 11. Revival of Obligations. If Bank is compelled to return
(pursuant to 11 U.S.C. ss.ss. 544, 547, 548, 550 or any other provision of the
Bankruptcy Code or other applicable state or federal law) to a bankruptcy
trustee, debtor-in-possession, receiver, trustee, liquidator, or other similar
person, or to any other creditor(s) of any Obligor, any payments received from
Obligor, then Obligors shall be liable to Bank for the amount returned, with
interest at the rate of two percent (2%) per month, and all of the obligations
of Obligors under the Loan Documents shall be revived and reinstated as though
the amount returned had never been paid to Bank, except that no interest shall
accrue on such amount while it was held by Bank.

         Section 12. Miscellaneous Provisions.
                     ------------------------

                  (a)      Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and assigns; provided, however, that the foregoing shall not
authorize any assignment by Obligors of their rights or duties hereunder.

                  (b)      Applicable Law. This Agreement shall be deemed to
have been made in the State of California and the validity, construction, and
interpretation and enforcement hereof, and the rights of the parties hereto,
shall be determined under, governed by, and construed in accordance with the
internal laws of the State of California, without regard to the principles of
conflicts of law.

                  (c)      Integration. This Agreement the Loan Documents and
any documents executed in connection herewith or therewith or pursuant hereto or
thereto contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior agreements, understandings, offers
and negotiations, oral or written, with respect thereto and no extrinsic
evidence whatsoever may be introduced in any judicial or arbitration proceeding,
if any, involving this Agreement; except that any financing statements or other
agreements or instruments filed by Bank with respect to the Loan Documents shall
remain in full force and effect.

                  (d)      Course of Dealing; Waivers. No course of dealing on
the part of Bank or its officers, nor any failure or delay in the exercise of
any right by Bank, shall operate as a waiver thereof, and any single or partial
exercise of any such right shall not preclude any later exercise of any such
right. Bank's failure at any time to require strict performance by Obligors of
any provision shall not affect any right of Bank thereafter to demand strict
compliance and performance. Any suspension or waiver of a right must be in
writing signed by an officer of Bank.

                  (e)      Time is of the Essence. Time is of the essence as to
each and every term and provision of this Agreement and the other Loan
Documents.

                  (f)      Counterparts. This Agreement may be signed in
counterparts and all of such counterparts when properly executed by the
appropriate parties thereto together shall serve as a fully executed document,
binding upon the parties.

                  (g)      Legal Effect. The Loan Documents remain in full force
and effect. If any provision of this Agreement conflicts with applicable law,
such provision shall be deemed severed from this Agreement, and the balance of
this Agreement shall remain in full force and effect.

                                      -9-
<PAGE>

                  (h)      Waiver of Jury. Bank and Obligors acknowledge and
agree that the time and expense required for trial by jury exceed the time and
expense required for a bench trial and hereby waive, to the extent permitted by
law, trial by jury of any claim or cause of action based upon, related to or
arising out of the transactions contemplated by the loan agreement, including
contract claims, tort claims, breach of duty claims, and all other common law or
statutory claims. Each party recognizes and agrees that the foregoing waiver
constitutes a material inducement for it to enter into this agreement. Each
party represents and warrants that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel.

                  (i)      Assignment and Indemnity. Obligors consent to Bank's
assignment of all or any part of Bank's rights under this Agreement and the Loan
Documents. Obligors shall indemnify and defend and hold Bank and any assignee of
Bank's interests harmless from any actions, costs, losses or expenses (including
attorneys' fees) arising out of such assignment, this Agreement and the Loan
Documents.

                  (j)      Power of Attorney. Obligors confirm that the
irrevocable power of attorney granted in the Loan Documents remains in full
force and effect as to Obligors.

                  (k)      Receipt and Application of Payments. All payments
hereunder and under the Loan Agreement may, at Bank's option, first be applied
against Bank Expenses and accrued and unpaid interest, and the balance against
the principal portion of the Existing Indebtedness in reverse order of maturity,
all in Bank's sole and absolute discretion. Acceptance by Bank of any payment in
an amount less than the amount then due shall be deemed an acceptance on account
only, and the failure to pay the entire amount then due shall be, and continue
to be, an Event of Default pursuant to this Agreement and/or the Loan Documents,
and at any time thereafter and until the entire amount then due has been paid,
Bank shall be entitled to exercise all rights conferred upon it herein, or in
the Loan Agreement, or hereunder, upon the occurrence of an Event of Default. To
the extent that Bank receives any payment or benefit and such payment or
benefit, or any part thereof, is required to be repaid to a trustee, receiver,
or any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or benefit, the Existing
Indebtedness, or any part thereof intended to be satisfied, shall be revived and
continued in full force and effect as if such payment or benefit had not been
made, shall accrue interest at the highest rate applicable to any portion
thereof, shall be secured by the Collateral and payable on demand.

                  (l)      Bank Expenses. Subject to the limitation in
Section 9(a)(iii) hereof on the amount of Bank's Accrued Legal Expenses,
Assignees shall reimburse Bank for all expenses incurred by Bank, at any time
on, before or after the date hereof in connection with (i) preparing and
negotiating this Agreement; (ii) protecting Bank's security interests and liens
in the Collateral; and (iii) any matters contemplated by or arising out of this
Agreement or the Loan Agreement including, by way of illustration only, any
action taken (a) to commence, prosecute, defend or intervene in any litigation
(adversary proceeding or otherwise) or to file a petition, complaint, answer,
motion or other pleadings; (b) to take any other action in or with respect to
any suit, case, motion, appeal or proceeding (bankruptcy or otherwise); (c) to
draft documents in connection with any of the foregoing or in connection with
any proposed modification or amendment of this Agreement or the Loan Agreement,
or any proposed waiver, extension or

                                      -10-
<PAGE>

refinance of the Existing Debt, including, but not limited to, all outside
counsel fees incurred by Bank in connection with the preparation and negotiation
of this Agreement and the Loan Agreement; (d) to protect, collect, lease, sell,
take possession of or liquidate any of the Collateral or assets of Obligors; (e)
to attempt to enforce any rights of Bank to collect any part of the Existing
Indebtedness; or (f) any matter relating to the ongoing administration of this
Agreement or the Loan Agreement (collectively "Bank Expenses"). Bank Expenses
shall also include all expenditures by Bank, including payment made by Bank for
taxes; insurance; assessments; costs or expenses which Obligors are required to
pay under this Agreement or the Loan Agreement, but fail to pay; inside and
outside counsel fees and any expenses, costs and charges relating to such
expenditures (including, without limitation, all fees of legal assistants and
other staff employed by such attorneys); and all other expenses of any kind
whatsoever incurred by Bank in connection with administration of this Agreement
and the Loan Agreement, whether such expenditures, fees and expenses are
incurred before, after, or in connection with the commencement of a case or
proceeding under the Bankruptcy Code (or any other state or federal law
providing for the liquidation or reorganization of debtors or their assets),
including any actions taken in connection with cash collateral orders, motions
for relief from any stays, preparation for any objections to plans of
reorganization and any other negotiations, actions or appeals entered into,
taken or made in connection with the reorganization, bankruptcy or liquidation
of Obligors or the Collateral. With respect to Bank Expenses prior to the
execution of this Agreement, such amounts shall be paid within five (5) days of
presentment by Bank. With respect to all other Bank Expenses owing by Obligors
to Bank, such amounts shall be paid within ten (10) days of Obligors' receipt of
notice from Bank of the existence and amount of such Bank Expenses.

                  (m)      Judicial Reference.
                           ------------------

                  (i)      Other than (a) nonjudicial foreclosure and all
         matters in connection therewith regarding security interests in real or
         personal property, or (b) the appointment of a receiver, or the
         exercise of other provisional remedies (any and all of which may be
         initiated pursuant to applicable law), each controversy, dispute or
         claim between the Parties arising out of or relating to this Agreement,
         which controversy, dispute or claim is not settled in writing within
         thirty (30) days after the "Claim Date" (defined as the date on which a
         party subject to this Agreement gives written notice to all other
         parties that a controversy, dispute or claim exists), will be settled
         by a reference proceeding in California in accordance with the
         provisions of Section 638 et seq. of the California Code of Civil
         Procedure, or their successor section ("CCP"), which shall constitute
         the exclusive remedy for the settlement of any controversy, dispute or
         claim concerning this Agreement, including whether such controversy,
         dispute or claim is subject to the reference proceeding and except as
         set forth above, the parties waive their rights to initiate any legal
         proceedings against each other in any court or jurisdiction other than
         Santa Clara County (the "Court"). The referee shall be a retired Judge
         of the Court selected by mutual agreement of the parties, and if they
         cannot so agree within forty-five (45) days after the Claim Date, the
         referee shall be promptly selected by the Presiding Judge of the Court
         (or his representative). The referee shall be appointed to sit as a
         temporary judge, with all of the powers for a temporary judge, as
         authorized by law, and upon selection should take and subscribe to the
         oath of office as provided for in Rule 244 of the California Rules of
         the Court (or any subsequently enacted Rule). Each party shall

                                      -11-
<PAGE>

         have one peremptory challenge pursuant to CCPss.170.6. The referee
         shall (a) be requested to set the matter for hearing within sixty (60)
         days after the date of selection of the referee, and (b) try any and
         all issues of law or fact and report a statement of decision upon them,
         if possible, within ninety (90) days of the Claim Date. Any decision
         rendered by the referee will be final, binding and conclusive and
         judgment shall be entered pursuant to CCPss.644 in any court in the
         State of California having jurisdiction. Any party may apply for a
         reference proceeding at any time after thirty (30) days following
         notice to any other party of the nature of the controversy, dispute or
         claim, by filing a petition for a hearing and/or trial. All discovery
         permitted by this Agreement shall be completed no later than fifteen
         (15) days before the first hearing date established by the referee. The
         referee may extend such period in the event of a party's refusal to
         provide requested discovery or unavailability of a witness due to
         absence or illness. No party shall be entitled to "priority" in
         conducting discovery. Depositions may be taken by either party upon
         seven (7) days written notice, and request for production or inspection
         of documents which cannot be resolved by the parties shall be submitted
         to the referee as provided herein. The Superior Court is empowered to
         issue temporary and/or provisional remedies, as appropriate.

                  (ii)     Except as expressly set forth in this Agreement, the
         referee shall determine the manner in which the reference proceeding is
         conducted including the time and place of all hearings, the order of
         presentation of evidence, and all other questions that arise with
         respect to the course of the reference proceeding. All proceedings and
         hearings conducted before the referee, except for trial, shall be
         conducted without a court reporter except that when any party so
         requests, a court reporter will be used at any hearing conducted before
         the referee. The party making such a request shall have the obligation
         to arrange for and pay for the court reporter. The costs of the court
         reporter at the trial shall be borne equally by the parties.

                  (iii)    The referee shall be required to determine all issues
         in accordance with existing case law and the statutory laws of the
         State of California, without regard to principles of conflicts of law.
         The rules of evidence applicable to proceedings at law in the State of
         California will be applicable to the reference proceeding. The referee
         shall be empowered to enter equitable as well as legal relief, to
         provide all temporary and/or provisional remedies and to enter
         equitable orders that will be binding upon the parties. The referee
         shall issue a single judgment at the close of the reference proceeding,
         which shall dispose of all of the claims of the parties that are the
         subject of the reference. The parties hereto expressly reserve the
         right to contest or appeal from the final judgment or any appealable
         order or appealable judgment entered by the referee. The parties hereto
         expressly reserve the right to findings of fact, conclusions of laws, a
         written statement of decision, and the right to move for a new trial or
         a different judgment, which new trial, if granted, is also to be a
         reference proceeding under this provision.

                  (iv)     In the event that the enabling legislation which
         provides for appointment of a referee is repealed (and no successor
         statute is enacted), any dispute between the parties that would
         otherwise be determined by the reference procedure herein described
         will be resolved and determined by arbitration. The arbitration will be
         conducted by a retired judge of the Court, in accordance with the
         California Arbitration Act, ss. 1280 through ss. 1294.2 of the CCP as
         amended from time to time. The limitations with respect to discovery as
         set forth hereinabove shall apply to any such arbitration proceeding.

                                      -12-
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first written above.

                                        IMATEC LTD.

                                        By:
                                               ---------------------------------
                                        Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------

                                        SEQUEL ACQUISITION CORPORATION

                                        By:
                                               ---------------------------------
                                        Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------

                                        IMPERIAL BANK

                                        By:
                                               ---------------------------------
                                        Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------

                                        SEQUEL TECHNOLOGY CORPORATION

                                        By:
                                               ---------------------------------
                                        Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------

                                      -13-
<PAGE>

                                 Schedule 6(i)
          Patents, Trademarks, Et Cetera Assigned to Dr. Hanoch Shalit
          ------------------------------------------------------------

1.       Photographic Video Recording Processor and Method, Hanoch Shalit,
European Patent No. EP 0,737,000 (Application No. 96110861.1). Issued: May 21,
1999.

2.       Sunlight Illuminator For Interior Lighting Using Flexible Light
Conductor, Hanoch Shalit, US Patent Application No. 09/241,001. Applied
February 1, 199 . Allowed: May 9, 2000.

3.       Motion Picture Film Production Method and System, Hanoch Shalit, US
Patent Application No. 09/221890. Applied: December 28, 1998.

4.       Photographic Video Recording Processor and Method, Hanoch Shalit,
Japanese Patent Application Number 2-511276, January 27, 1997.

5.       Photographic Video Recording Processor and Method (for Medical
Imaging), Hanoch Shalit, European Patent No. EP 0,489,758, issued January 27,
1997.

6.       Method and System For Improved Tone and Color Reproduction of
Electronic Hanoch Shalit, US Patent No. 5,345,315, issued: September 6, 1994.

7.       Method and System in video Image Reproduction (for Television & Color),
Hanoch Shalit, US Patent No. 5,115,229 issued: May 19,1992.

8.       Method and System in Video Image Hard Copy Reproduction (for Medical
Imaging), Hanoch Shalit, US Patent No. 4,939,581, issued: July 3, 1990.

9.       Sunlight Illuminator for Interior Lighting Using Flexible Light
Conductor, Notice of Allowance and Issue Fee Date, dated May 9, 2000.

                                      -14-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00016-of-00352.parquet"}]]