Document:

Exhibit 10.9

         

        EXTENSION AGREEMENT

         

        This Extension Agreement (“Amendment”) is made as of this 3rd day of June, 2009 by and between Ophthalmic Imaging Systems, a California corporation (“Company”), and The Tail Wind Fund Ltd. (“Tail Wind”) and Solomon Strategic Holdings, Inc.
        (“Solomon”, and together with Tail Wind, the “Holders”).

        WITNESSETH:

        WHEREAS, pursuant to that certain Securities Purchase Agreement (“Purchase Agreement”) dated as of October 29, 2007 by and between the Company and the Holders, on or about such date the Company sold and issued to the Holders (i) 6.5% Convertible Notes Due April 30, 2010 in the aggregate principal amount
        of $2,750,000 (“Notes”), which Notes are convertible into shares of common stock of the Company, no par value per share (“Common Stock”), and (ii) Warrants to purchase shares of Common Stock (“Warrants”); capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Purchase Agreement, Notes or Warrants, as the case may be;

        WHEREAS, pursuant to the Notes, the Company is required to make payment of Bi-Monthly Amounts until the Notes are repaid in full on the Maturity Date;

        WHEREAS, all Bi-Monthly Amounts due prior to the date hereof have been paid in full;

        WHEREAS, the Holders are willing to extend the payment dates for such Bi-Monthly Amounts and the Maturity Date on the terms and conditions set forth herein;

        NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

        1.      Extension. In consideration for the New Warrants being issued pursuant to Section 2 below and subject to the terms hereof, the Holders hereby agree that:

        
            	
                         

                    	
                        (a)

                    	
                        each remaining Bi-Monthly Payment Date under the Notes, beginning on June 30, 2009 shall be extended by 18 months, such that the next occurring Bi-Monthly Payment Date shall be December 31, 2010 and thereafter the Bi-Monthly Payment Dates shall be the last Business Day of each other calendar month (for example, the originally scheduled
                        Bi-Monthly Payment Date for June 30, 2009 shall be extended until and shall occur on December 31, 2010, the originally scheduled Bi-Monthly Payment Date for August 31, 2009 shall be extended until and shall occur on February 28, 2011, the originally scheduled Bi-Monthly Payment Date for October 31, 2009 shall be extended until and shall occur on April 30, 2011, and so forth); and

                    

        

        
            	
                         

                    	
                        (b)

                    	
                        the Maturity Date under the Notes shall be extended until October 31, 2011;

                    

        

         

        
            

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        provided however, that such extensions shall immediately expire and terminate, as if this Amendment were never entered into, in the event that the Company fails to receive at least $3,999,908.90 at a first closing of the Common Stock Financing Transaction (as defined below) on or prior to July 31, 2009 (“Financing Condition”). In the
        event that the Financing Condition is not timely satisfied, then (1) any and all Bi-Monthly Amounts which would have been previously due and payable if not for this Amendment shall become immediately due and payable, (2) any and all Bi-Monthly Amounts with an applicable Bi-Monthly Payment Date extended hereunder shall become due and payable on the Bi-Monthly Payment Date set forth in the Notes without consideration of this Amendment, and (3) the Maturity Date shall revert to April 30,
        2010 (subject to acceleration as set forth in the Notes).

        For purposes hereof, “Common Stock Financing Transaction” means the sale and issuance of an aggregate of 13,214,317 shares of Common Stock by the Company to U.M. AccelMed Limited Partnership (“AccelMed”) in a capital raising financing to occur in two closings, provided that (a) the direct or indirect effective purchase
        price per share of Common Stock shall be equal to $0.41522 for the 9,633,228 shares of Common Stock sold in the first closing of the Common Stock Financing Transaction and $0.55848 for the 3,581,089 shares of Common Stock sold in the deferred closing of the Common Stock Financing Transaction, (b) the transaction shall not be a Variable Rate Transaction or MFN Transaction or otherwise contain any adjustments to such effective sale price per share or any exercise price under any warrants
        (except for weighted-average anti-dilution adjustment of the exercise price under warrants in connection with any equity issuances, substantially similar to that set forth in the Warrants), and (c) the Company may issue to the purchasers thereof, in connection with any such financing, warrants to purchase a number of shares of Common Stock equal to up to 33% of the number of shares of Common Stock sold to such purchasers in such financing, provided that the effective exercise price per
        share of Common Stock under such warrants shall be equal to $1.00.

        The Company represents and warrants to the Holders that (i) it has entered into an agreement to receive $3,999,908.90 million in the first closing of the Common Stock Financing Transaction, and (ii) the purchaser therein has committed to invest an additional $1,999,966.50 in the deferred closing of the Common Stock Financing Transaction contemplated to occur on
        or prior to June 30, 2010, provided that such second round Common Stock Financing Transaction is subject to certain milestones to be achieved by the Company which are set forth in such agreement.

        2.   New Warrants. As consideration for the extensions granted by the Holders herein, the Company shall issue and deliver to the Holders 3-year warrants to purchase 500,000 shares of Common Stock in the aggregate at an initial exercise price per share equal to $1.00
        (“New Warrants”). The New Warrants shall be in the same form as the Warrants, except that the initial Warrant Price shall be $1.00, the Issuance Date shall be the date hereof, the Expiration Date shall be three (3) years from the date hereof, and Cashless Exercise shall be permitted nine (9) months following the date hereof if there is not an effective registration statement and current prospectus covering the resale of all the shares of Common Stock underlying the
        New Warrants by the Holders. Such New Warrants shall be duly and validly issued and free and clear of all liens, claims and encumbrances and shall be delivered to the Holders within five (5) business days after the date hereof.

        3.   Conditions Subsequent. The Financing Condition and the Company’s obligation to timely issue the New Warrants shall be conditions subsequent to this Amendment, and if such conditions are not timely made then this Amendment shall be null and void as if this Amendment
        were never entered into, provided that if the Financing Condition is not satisfied the Holders shall still keep and retain the New Warrants without any affect thereon.

         

        
            

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        4.   Rule 144. The Company acknowledges and agrees that, for purposes of Rule 144 promulgated under the Securities Act of 1933, as amended (“Securities Act”), the holding period for the shares of Common Stock issuable upon conversion or cashless exercise of, or
        otherwise pursuant to, the Notes and/or Warrants, shall have commenced on October 29, 2007 (the date of original issuance of the Notes and the Warrants), notwithstanding this Amendment. Without limiting the foregoing, if at any time it is determined that such holding period does not relate back to such date, the Company will promptly cause the registration of all such underlying shares under the Securities Act to the extent not so registered (without regard to any beneficial ownership
        or issuance limitations contained in the Notes and/or Warrants). In connection with any registration of shares of Common Stock pursuant to this Section, the Company and the Holders shall enter into a registration rights agreement containing customary and reasonable provisions regarding the registration of securities under the Securities Act which shall not be more favorable than the registration rights granted under the Common Stock Financing Transaction.

        5.   Adjustments. For clarification, the Conversion Price under the Notes and the Warrant Price under the Warrants shall be adjusted in accordance with their terms as a result of any Common Stock Financing Transaction and the issuance of the New Warrants and the Company shall
        promptly deliver to the Holders a notice of adjustment pursuant to the Notes and Warrants reflecting the adjusted Conversion Price and Warrant Price in connection with the Common Stock Financing Transaction and the issuance of the New Warrants.

        6.   Disclosure. To the extent the transactions contemplated by this Amendment constitute material non-public information concerning the Company or are otherwise required to be publicly disclosed under the Securities Exchange Act of 1934, as amended, and the rules promulgated
        thereunder, the Company shall, within three (3) business days following the date hereof, issue a press release and/or Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby. The Company and the Holder shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby.

        
            7.   Waiver.  Each of the Holders hereby:

            (a) acknowledges that the Company has provided advance written notice to the Purchasers, within the prescribed period, pursuant to Section 7.3 of the Purchase Agreement, with respect to the currently contemplated Common Stock Financing Transaction with AccelMed; 

        

        (b) expressly waives its right to participate in the currently contemplated Common Stock Financing Transaction with AccelMed pursuant to Section 7.3 of the Purchase Agreement;

        (c) expressly waives its right to have the Company reserve 125% of the number of shares of Common Stock sufficient to permit the full conversion of Notes (including payment and repayment of interest and principal thereon) and to permit the full exercise of the Warrants in accordance with the
        terms of the Warrants pursuant to Section 7.5 of the Purchase Agreement, until June 30, 2010, provided that the Company reserves at least 1.4 million shares of Common Stock for the conversion of the Notes and exercise of the Warrants and New Warrants;

        (d) expressly waives its rights triggered upon a Change in Control Transaction (as defined therein) in connection with the currently contemplated Common Stock Financing Transaction with AccelMed, pursuant to Section 3(c)(vi) of the Notes, provided that AccelMed does not beneficially
        own in excess of 49.9% of the Company’s outstanding common stock or voting power (provided for this purpose that AccelMed shall not be deemed to beneficially own (i) any shares underlying warrants until such warrants are exercised but shall be deemed to own any shares into which convertible debt or convertible preferred securities are convertible if such securities entitle AccelMed to any voting rights, or (ii) any shares issued upon exercise of warrants so long as such shares are
        sold in a private transaction or publicly on a national securities exchange or the Over-the Counter Bulletin Board within 90 days following such exercise and during such 90-day period AccelMed does not vote such shares on, or consent to, any matters concerning the Company or otherwise engage in any corporate actions concerning the Company); provided however, that AccelMed’s beneficial ownership of the Company’s outstanding common stock may exceed such 49.9% figure if
        such excess is due solely to the Company’s retirement to treasury or cancellation of shares currently owned by MediVision which are forfeited to the Company in connection with the acquisition of MediVision, so long as AccelMed does not vote such shares in excess of 49.9% (or otherwise consent to any action or matter in lieu of a vote).

        (e) expressly waives its right to convert the Notes under Section 3 of the Notes and exercise the Warrants under Sections 2(a) and (c) of the Warrant in an aggregate amount in excess of 1.4 million shares of Common Stock until the earliest to occur of (i) June 30, 2010, (ii) the
        date on which the Company amends its Articles of Incorporation to increase the amount of shares of Common Stock to 100 million; and (iii) the date on which the Company consents to the conversion of the Notes in full and exercise the Warrants in full (such earliest date, the “Deadline”) (for clarification, with respect to any cashless exercise of any warrants only the net number of shares of Common Stock to be received shall be counted with respect to the 1.4 million
        shares limit).

         

        
            

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        8.   Additional Shares.   If at any time after the Deadline the Company does not have duly authorized and reserved for issuance to the Holders, upon conversion and exercise of the Notes, Warrants and New Warrants, a number of shares of Common Stock at least equal to 125% of
        the number shares issuable in the aggregate upon full conversion of the Notes and full exercise of the Warrants and New Warrants (without consideration of any limitations on beneficial ownership contained therein) (“Reserve Amount”), then (i) such failure shall constitute an Event of Default under the Notes, and (ii) each Holder may compel the Company to purchase its Warrants and/or New Warrants at the Black-Scholes Option Pricing Model value for such securities. If
        at any time after December 31, 2009 (“Effective Date”) the Company does not have authorized and reserved for issuance to the Holders, upon conversion and exercise of the Notes, Warrants and New Warrants, a number of shares of Common Stock at least equal to the Reserve Amount, then the Company shall make pro-rata payments to the Holders, as liquidated damages and not as a penalty, in an amount equal to 2% of the sum of the aggregate principal amount then outstanding
        under the Notes for each month (or portion thereof) following the Effective Date that the Company does not have the requisite number of duly authorized and reserved shares as provided herein..

        9.    Miscellaneous.

        (a) Full Force and Effect. Except as otherwise expressly provided herein, each of the Purchase Agreement, the Notes, the Warrants and the other agreements and transactions contemplated thereby (“Transaction Documents”) shall remain in full force and effect. Except
        for the waiver and modifications contained herein, this Amendment shall not in any way waive or prejudice any of the rights or obligations of the Holders or the Company under the Transaction Documents, under any law, in equity or otherwise, and such modifications shall not constitute a waiver or modification of any other provision of the Transaction Documents nor a waiver or modification of any subsequent default or breach of any obligation of the Company or of any subsequent right of
        the Holders.

        (b) Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York.

        (c)  Counterparts. This Amendment may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. This Amendment may be executed by facsimile or by email of a digital image format or
        portable document format of the signature page hereto.

        (d) Entire Agreement. This Amendment together with the Purchase Agreement (and all documents referred to therein), the Notes, the Warrants and the New Warrants contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as
        specifically set forth herein or therein, neither the Company nor the Holders make any representation, warranty, covenant or undertaking with respect to such matters.

        [Signature page follows]

         

        
            

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        IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed as of the date first written above.

         

        
            	
                         

                    	
                         

                        OPHTHALMIC IMAGING SYSTEMS INC.

                         

                         

                        By: /s/ Gil Allon                                                

                        Name:  Gil Allon

                        Title:    Chief Executive Officer

                    
	
                         

                    	
                         

                         

                    
	
                    	
                        By: /s/ Ariel Shenhar                                        

                        Name:  Ariel Shenhar

                        Title:    Chief Financial Officer

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                        THE TAIL WIND FUND LTD.

                         

                        By:       TAIL WIND ADVISORY AND

                        MANAGEMENT LTD., as 

                        investment manager

                         

                         

                        By: /s/ Daniel Nye                                        

                        Name: Daniel Nye

                        Title:   Portfolio Manager

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                        SOLOMON STRATEGIC HOLDINGS, INC.

                         

                         

                        By:  /s/ Andrew P. MacKellar                                           

                        Name: Andrew P. MacKellar

                        Title:   Director

                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    

        

         

         

        
            

            5Exhibit 10.10

         

        NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
        STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

         

        THIS WARRANT DOES NOT REQUIRE PHYSICAL SURRENDER OF THE WARRANT IN THE EVENT OF A PARTIAL EXERCISE. AS A RESULT, FOLLOWING ANY EXERCISE OF ANY PORTION OF THIS WARRANT, THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT MAY BE EXERCISED MAY BE LESS THAN THE NUMBER OF SHARES SET FORTH BELOW.

         

        Issuance Date: June 24, 2009

         

        OPHTHALMIC IMAGING SYSTEMS 

        PURCHASE WARRANT

        WARRANT (“WARRANT”) TO PURCHASE SHARES OF

        COMMON STOCK, NO PAR VALUE PER SHARE

        This is to certify that, FOR VALUE RECEIVED,
        [                                                  ] (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from OPHTHALMIC IMAGING SYSTEMS, a corporation organized under the laws of California
        (“Company”), at any time and from time to time after the issuance hereof but not later than 11:59 P.M., Eastern time, on the third (3rd) anniversary of the Issuance Date hereof (“Expiration Date”), [               ] shares (“Warrant Shares”) of Common Stock, no par value (“Common Stock”), of the Company, at an exercise price per share equal to
        $1.00 (the exercise price in effect from time to time hereafter being herein called the “Warrant Price”). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

        This Warrant has been issued pursuant to the terms of the Purchase Agreement (“Purchase Agreement”) dated on or about the date hereof between the Company and the Warrantholder. Capitalized terms used herein and not defined shall have the meaning specified in the Purchase Agreement.

         

        
            

             

             

             

            

        

        
            

        

         

        Section 1.        Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of the Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder.

        Section 2.        Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (“Securities Act”) or an exemption from registration thereunder. Subject to such restrictions, the Company
        shall transfer this Warrant from time to time, upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer properly endorsed or accompanied by appropriate instructions for transfer upon any such transfer, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. 

        Section 3.

        (a)       Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time and from time to time on and after the Exercise Date upon surrender of the Warrant, together with delivery of the duly executed Warrant exercise form attached
        hereto (the “Exercise Agreement”) (which may be by fax or email), to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company of the Warrant Price for the Warrant Shares specified in the Exercise
        Agreement. The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder’s designee, as the record owner of such shares, as of the close of business on the date on which the completed Exercise Agreement shall have been delivered to the Company (or such later date as may be specified in the Exercise Agreement). Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall
        be delivered to the holder hereof within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall (subject to Section
        3(b) below), at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon exercise of this Warrant, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Deposit/Withdrawal at Custodian
        (“DWAC”) system, upon request of the Warrantholder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon exercise to the Warrantholder (or its designee), by crediting the account of the Warrantholder’s (or such designee’s) prime broker with DTC through its DWAC system (provided that the same time periods herein as for stock certificates shall apply). 

         

        
            

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        (b)       Book-Entry. Notwithstanding anything to the contrary set forth herein, upon exercise of any portion of this Warrant in accordance with the terms hereof, the Warrantholder shall not be required to physically surrender this Warrant to the Company unless such holder is purchasing the full
        amount of Warrant Shares represented by this Warrant. The Warrantholder and the Company shall maintain records showing the number of Warrant Shares so purchased hereunder and the dates of such purchases or shall use such other method, reasonably satisfactory to the Warrantholder and the Company, so as not to require physical surrender of this Warrant upon each such exercise. The Warrantholder and any assignee, by acceptance of this Warrant or a new Warrant, acknowledge and agree that,
        by reason of the provisions of this paragraph, following exercise of any portion of this Warrant, the number of Warrant Shares which may be purchased upon exercise of this Warrant may be less than the number of Warrant Shares set forth on the face hereof.

        (c)       Cashless Exercise. During any time following the date which is nine (9) months following the Issuance Date hereof that there is not an effective registration statement and current prospectus covering the resale of the Warrant Shares by the Warrantholder, the Warrantholder shall have the
        right to pay the aggregate Warrant Price by “Cashless Exercise”. To effect a Cashless Exercise, the holder shall submit to the Company on the Exercise Agreement written notice of the holder’s intention to do so, including a calculation of the number of shares of Common Stock to be issued upon such exercise in accordance with the terms hereof. In the event of a Cashless Exercise, in lieu of paying the Warrant Price in cash, the holder shall surrender this Warrant for
        that number of shares of Common Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Fair Market Value per share of the Common Stock and the applicable Warrant Price, and the denominator of which shall be the then current Fair Market Value per share of the Common Stock. For this purpose, the “Fair Market Value” of the Common Stock shall be
        the average of the closing sale prices of the Common Stock as reported by the Principal Market for the ten (10) Trading Days immediately preceding the date of the Exercise Agreement.

        Section 4.        Compliance with the Securities Act of 1933. Neither this Warrant nor the Common Stock issued upon exercise hereof nor any other security issued or issuable upon exercise of this Warrant may be offered or sold except as provided in this Warrant and in conformity with the
        Securities Act of 1933, as amended, and then only against receipt of an agreement of such person to whom such offer of sale is made to comply with the provisions of this Section 4 with respect to any resale or other disposition of such security. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant until the Warrant Shares have been registered for
        resale under the Registration Rights Agreement or until Rule 144 is available, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.

        Section 5.        Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in
        respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued. The holder shall be responsible for income taxes due under federal or state law, if any such tax is due.

         

        
            

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        Section 6.        Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed,
        a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if reasonably requested by the Company.

        Section 7.        Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved, out of the authorized and unissued Common Stock, a number of shares sufficient to provide for the exercise of the
        rights of purchase represented by the Warrant in full (without regard to any restrictions on beneficial ownership contained herein), and the transfer agent for the Common Stock, including every subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise of any of the right of purchase aforesaid (“Transfer Agent”), shall be irrevocably authorized and directed at all times to reserve such number of authorized
        and unissued shares of Common Stock as shall be requisite for such purpose. The Company agrees that all Warrant Shares issued upon exercise of the Warrant in accordance with its terms shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company. The Company will keep a conformed copy of this Warrant on file with its Transfer Agent. The Company will supply from time to
        time the Transfer Agent with duly executed stock certificates required to honor the outstanding Warrant.

        Section 8.        Warrant Price. The Warrant Price, subject to adjustment as provided in Section 9, shall, if payment is made in cash or by certified check, be payable in lawful money of the United States of America.

        Section 9.        Adjustments. Subject and pursuant to the provisions of this Section 9, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. 

        (a)       If the Company or any of its subsidiaries shall at any time or from time to time while the Warrant is outstanding, pay a dividend or make a distribution on its capital stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares into a smaller number of
        shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder
        thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event. Such adjustment shall be made successively whenever any event listed above shall occur.

         

        
            

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        (b)       If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization,
        reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a
        number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitations, provision for adjustment of the Warrant Price) shall
        thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring
        such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company, the obligation to deliver to the holder of the Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations,
        mergers, sales, transfers or other dispositions.

        (c)       In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets or subscription rights or warrants, the Warrant Price to be
        in effect after such record date shall be determined by multiplying the Warrant Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Closing Price per share of Common Stock (as defined below), less the fair market value (on a per share basis) (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so
        distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Closing Price per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed. “Closing Price” of the Common Stock shall be the closing sale price per share of the Common Stock as reported by the Principal Market on the Trading Day immediately preceding the date on
        which such value is being determined.

         

        
            

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        (d)       In the event that the Company or any of its subsidiaries (A) issues or sells any Common Stock or Convertible Securities (as defined in the Notes), or any warrants or other rights to subscribe for or to purchase or any options for the purchase of its Common Stock or (B) directly or indirectly effectively reduces the conversion, exercise or
        exchange price for any Convertible Securities which are currently outstanding (other than pursuant to terms existing on the date hereof), at or to an effective Per Share Selling Price (as defined in the Notes) which is less than the greater of (x) the closing price on the Trading Day next preceding such issue or sale or, in the case of issuances to holders of its Common Stock, the date fixed for the determination of stockholders entitled to receive such warrants, rights, or options, or
        (y) the then applicable Warrant Price, then in each such case, the Warrant Price in effect immediately prior to such issue or sale or record date, as applicable, shall be automatically reduced effective concurrently with such issue or sale to an amount determined by multiplying the Warrant Price then in effect by a fraction, (a) the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issue or sale, plus (2) the number of
        shares of Common Stock which the aggregate consideration received by the Company for such additional shares would purchase at such closing price or Warrant Price, as the case may be, and (b) the denominator of which shall be the number of shares of Common Stock of the Company outstanding immediately after such issue or sale.

        The foregoing provisions of this subsection shall not apply to issuances or sales of (w) the Securities, (x) Common Stock upon conversion, exercise or exchange of Convertible Securities outstanding on the issuance date hereof in accordance with the terms in effect on such issuance date, (y) Common Stock or Convertible Securities under the Company’s duly adopted stock option and
        bonus plans for employees and directors, or (z) Common Stock to the current shareholders of MediVision Medical Imaging Ltd. in exchange for shares of common stock of such entity in connection with the acquisition of such entity as currently contemplated. For the purposes of the foregoing adjustments, in the case of the issuance of any Convertible Securities, the maximum number of shares of Common Stock issuable upon exercise, exchange or conversion of such Convertible Securities shall
        be deemed to be outstanding, provided that no further adjustment shall be made upon the actual issuance of Common Stock upon exercise, exchange or conversion of such Convertible Securities. For purposes of this Section, if an event occurs that triggers more than one of the above adjustment provisions, then only one adjustment shall be made and the calculation method which yields the greatest downward adjustment in the Warrant Price shall be used.

        (e)       An adjustment shall become effective immediately after the record date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.

        (f)        In the event that, as a result of an adjustment made pursuant to Section 9, the holder of this Warrant shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment
        from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.

         

        
            

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        (g)       In the event of any adjustment in the number of Warrant Shares issuable hereunder upon exercise, the Warrant Price shall be inversely proportionately increased or decreased, as the case may be, such that the aggregate purchase price for Warrant Shares upon full exercise of this Warrant shall remain the same. Similarly, in the event of any
        adjustment in the Warrant Price, the number of Warrant Shares issuable hereunder upon exercise shall be inversely proportionately increased or decreased, as the case may be, such that the aggregate purchase price for Warrant Shares upon full exercise of this Warrant shall remain the same.

        Section 10.      Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of the Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon the exercise of the Warrant (or specified portions thereof),
        the Company shall round such calculation to the nearest whole number and disregard the fraction. 

        Section 11.      Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the
        Warrantholder.

        Section 12.      Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall forthwith give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted
        number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. In the event of a dispute with respect to any such calculation, the certificate of the Company’s independent certified public accountants shall be conclusive evidence of the correctness of any computation made, absent manifest error. Failure to give such notice to the Warrantholder or any defect therein shall not
        affect the legality or validity of the subject adjustment. At the Warrantholder’s request, the Company shall deliver to the Warrantholder as of a requested date a notice specifying the Warrant Price and the number of Warrant Shares into which this Warrant is exercisable as of such date.

        Section 13.      Identity of Transfer Agent. The initial Transfer Agent for the Common Stock is: 

         

        
            	
                         

                    	
                        ______________________________

                        ______________________________

                        ______________________________

                    	
                         

                    

        

         

        Forthwith upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will fax to the Warrantholder a statement setting forth the name and address of such transfer agent.

         

        
            

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        Section 14.      Notices. Any notice pursuant hereto to be given or made by the Warrantholder to or on the Company shall be sufficiently given or made if delivered personally or by facsimile or if sent by an internationally recognized courier, addressed as follows:

         

        
            	
                         

                    	
                        OPHTHALMIC IMAGING SYSTEMS

                        221 Lathrop Way, Suite I

                        Sacramento, CA 95815

                        Attn: Ariel Shenhar, CFO

                        Fax: 916-646-0207

                    	
                         

                    

        

         

        or such other address as the Company may specify in writing by notice to the Warrantholder complying as to delivery with the terms of this Section 14.

        Any notice pursuant hereto to be given or made by the Company to or on the Warrantholder shall be sufficiently given or made if personally delivered or if sent by an internationally recognized courier service by overnight or two-day service, to the address set forth on the books of the Company or, as to each of the Company and the Warrantholder, at such other address as shall be
        designated by such party by written notice to the other party complying as to delivery with the terms of this Section 14. 

        All such notices, requests, demands, directions and other communications shall, when sent by courier, be effective two (2) days after delivery to such courier as provided and addressed as aforesaid. All faxes shall be effective upon receipt.

        Section 15.     Registration Rights. The initial holder of this Warrant is entitled to the benefit of certain registration rights in respect of the Warrant Shares as provided in the Registration Rights Agreement. 

        Section 16.     Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. 

        Section 17.     Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of New York, without giving effect to its conflict of law principles that would defer to the substantive laws of another jurisdiction.

        Section 18.      9.9% Limitation. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the holder upon exercise pursuant to the terms hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed
        beneficially owned by such holder at such time (other than by virtue of the ownership of securities or rights to acquire securities (including the Notes and Warrant Shares) that have limitations on the holder’s right to convert, exercise or purchase similar to the limitation set forth herein), together with all shares of Common Stock deemed beneficially owned (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to
        convert, exercise or purchase similar to the limitation set forth herein) by the Warrantholder’s “affiliates” at such time (as defined in Rule 

         

        
            

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        144 of the Act) (“Aggregation Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Securities Exchange Act of 1934, as amended, exists, would exceed 9.9% of the total issued and outstanding shares of the Common Stock (the “Restricted Ownership Percentage”). Each holder shall have the right (x) at any time and from time to
        time to reduce its Restricted Ownership Percentage immediately upon notice to the Company and (y) (subject to waiver) at any time and from time to time, to increase its Restricted Ownership Percentage upon 61 days prior written notice to the Company.

        Section 19.      Replacement Warrants. The Company agrees that within ten (10) business days after any request from time to time of the Warrantholder, it shall deliver to such holder a new Warrant in substitution of this Warrant which is identical in all respects except that the then Warrant Price shall
        be appropriately specified in the Warrant, and the Warrant shall specify the fixed number of Warrant Shares into which this Warrant is then exercisable. Such changes are intended not as amendments to the Warrant but only as clarification of the foregoing numbers for convenience purposes, and such changes shall not affect any provisions concerning adjustments to the Warrant Price or number of Warrant Shares contained herein.

        Section 20.      Absolute Obligation to Issue Warrant Shares. The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the holder hereof to enforce the same, any waiver or consent with
        respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the holder hereof or any other Person of any obligation to the Company or any violation or alleged violation of law by the holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the holder
        hereof in connection with the issuance of Warrant Shares. The Company will at no time close its shareholder books or records in any manner which interferes with the timely exercise of this Warrant.

        Section 21.      Assignment, Etc. The Warrantholder may assign or transfer this Warrant to any transferee only with the prior written consent of the Company, which may not be unreasonably withheld or delayed, provided that the Warrantholder may assign or transfer this Warrant to any of such
        Warrantholder’s affiliates without the consent of the Company. The Warrantholder shall notify the Company of any such assignment or transfer promptly. This Warrant shall be binding upon the Company and its successors and shall inure to the benefit of the Warrantholder and its successors and permitted assigns.

         

        
            

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        IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first written above.

         

        
            	
                         

                    	
                        OPHTHALMIC IMAGING SYSTEMS 

                         

                         

                        By:___________________________

                        Name:

                        Title:

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                         

                    	
                         

                    
	
                        Attest:

                         

                        Sign:______________________________

                        Print Name:

                    	
                         

                    

        

         

         

         

        
            

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