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Exhibit 12
LASERTECHNICS, INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
June 25, 1997
Xxxxxxxxxx Partners L.P. ("WPLP")
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Xxxxxx Investment Corporation ("JPMIC")
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Note Purchase Agreement
Dear Sirs:
This letter sets forth the terms and conditions on which
Lasertechnics, Inc., a Delaware corporation (the "Company"), is issuing and
selling to each of WPLP and JPMIC (each, a "Purchaser") on the date hereof: (a)
a Senior Promissory Note of the Company in substantially the form attached
hereto as Exhibit A (each, a "Note"); (b) the number of shares (the "Restricted
Shares") of Common Stock, $.01 par value (the "Common Stock"), of the Company
determined as set forth in paragraph 2, below; and (c) a warrant in
substantially the form attached hereto as Exhibit B (each, a "Warrant") to
purchase the number of shares (the "Warrant Shares") of Common Stock determined
as set forth in paragraph 3, below.
1. Senior Promissory Notes.
(a) General. The Senior Promissory Notes shall
represent and evidence the indebtedness of the Company to the Purchasers for
advances made by the Purchasers to the Company from time to time thereunder
("Advances"), including without limitation the unpaid principal amount of, and
accrued interest on, all Advances, and any additional amounts that may be owed
by the Company to the Purchasers in respect thereof. Advances shall be made from
time to time in cash, or by the cancellation and exchange of other existing
indebtedness, as the Company may request; provided, however, that (i) the
Purchasers shall not be obligated to make any Advances in excess of the initial
Advances made by each Purchaser on the date hereof, (ii) the Purchasers shall
not be entitled to make any Advances, or to purchase any Notes or Warrants
hereunder, unless requested by the Company, and (iii) except as
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 2 of 11
provided in paragraph 1(c), below, any Advances made by the Purchasers hereunder
shall be made 60% by WPLP and 40% by JPMIC, unless both WPLP and JPMIC agree to
a different ratio. The rights and obligations of WPLP and JPMIC hereunder are
several and independent, and nothing herein shall be construed to constitute
either WPLP or JPMIC as the agent, representative, partner, joint venturer or
fiduciary of the other.
(b) Interest Rate. The Base Interest Rate for
all Advances by WPLP under its Note shall be 10.00% per annum. The Base Interest
Rate for all Advances by JPMIC under its Note shall be 6.64% per annum.
(c) Prior Advance by WPLP. Concurrently with
the purchase and sale of the Notes hereunder (the "Initial Closing"), the
Company and WPLP have agreed to convert certain prior advances by WPLP to the
Company in the aggregate principal amount of $1,000,000 (the "Prior Advances")
into Advances under the Notes. Accordingly, at the Initial Closing: (i) the
Prior Advances shall be recorded with appropriate notations on the Notes; (ii)
all promissory notes representing the Prior Advances, and all common stock
warrants issued by the Company to WPLP in respect of the Prior Advances, shall
be canceled and surrendered to the Company against receipt of the securities
issued to WPLP hereunder; and (iii) the indebtedness of the Company to WPLP
represented by the Prior Advances shall constitute an Advance by WPLP to the
Company under the Notes in the aggregate principal amount of the Prior Advances,
for all purposes hereof.
2. Restricted Shares. Upon the making of each Advance
under the Notes, the Company shall issue to each Purchaser 45.714 Restricted
Shares for each $1,000 principal amount of such Advance.
3. Common Stock Warrants. Upon the making of each
Advance under the Notes, the Company shall issue to each Purchaser a Warrant
representing the right to purchase 200 Warrant Shares for each $1,000 principal
amount of such Advance, at an exercise price of $.70 per share. Each Warrant
shall be exercisable for a period of three years from the date of issuance.
4. Allocation of Purchase Price. The amount of each
Advance hereunder shall be allocated as purchase price among the Notes (or, in
the case of any Advance following the Initial Closing, the increase in the
principal amount of the Notes), the Restricted Shares and the Warrants being
purchased by each Purchaser hereunder in such manner as such Purchaser shall
reasonably determine with the Company's consent, which consent shall not
unreasonably be withheld or delayed;
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 3 of 11
provided, however, that the portion of such purchase price allocated to such
Restricted Shares shall not in any event be less than the par value per share of
the Common Stock at the time of such Advance multiplied by the number of such
shares.
5. Loan Fee. In consideration for work performed in
connection with structuring, arranging for and providing the financings
contemplated hereby, upon the making of each Advance under the Notes, the
Company shall pay to each Purchaser a loan fee (the "Loan Fee") in the amount of
4% of the principal amount of such Advance, payable in shares of Common Stock,
valued at $.70 per share (the "Loan Fee Shares").
6. Pledge of Subsidiary Stock.
(a) The obligations of the Company under the Notes,
including without limitation the principal amount of, and
accrued interest on, all Advances, shall be ratably secured by
the pledge and collateral assignment of, and the grant of a
security interest in, all the issued and outstanding shares
(the "Pledged Shares") of capital stock of Lasertechnics
Marking Corporation, a wholly-owned subsidiary of the Company
(the "Stock Pledge"). The Stock Pledge shall be on such terms
as are reasonable and customary for transactions such as the
transactions contemplated hereby. Prior to the occurrence of
an event of default under the Notes, the Purchasers shall not
have any rights with respect to the voting or disposition of
any shares of such subsidiary capital stock so pledged.
(b) Concurrently, with the execution and delivery of
this Agreement, the Company is delivering to JPMIC, as
collateral agent for the benefit of the holders of the Notes,
ratably in proportion to the respective aggregate unpaid
principal amounts thereof (the "Collateral Agent"),
certificates representing the Pledged Shares, together with
stock powers in customary form. The Company hereby pledges the
Pledged Shares to the Collateral Agent, and grants to the
Collateral Agent a security interest therein, to secure the
full and timely payment and performance of all obligations of
the Company under the Notes, in accordance with paragraph
6(a), above, effective at the Initial Closing. The parties
shall use their respective best commercially reasonable
efforts to negotiate, execute and deliver a definitive pledge
agreement, in customary and reasonable form, to further
document the Stock Pledge on terms and conditions consistent
with the terms and conditions set forth
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 4 of 11
herein (the "Pledge Agreement"), and upon the effectiveness of
the Pledge Agreement, the terms of the Pledge Agreement shall
amend and supersede any contrary provisions of this paragraph
6(b).
7. Late Payment. In the event the Company fails to repay the
entire principal amount of, and accrued interest on, all Advances by 3:00 p.m.,
New York City time, on the Final Maturity Date, the Company shall issue to each
Purchaser the following additional consideration as a late payment fee:
(a) that number of shares of Common Stock equal to
(i) the aggregate unpaid principal amount of all Advances
outstanding on the Final Maturity Date, times (ii) 1%, divided
by (iii) the average closing price per share of the Common
Stock for the 10 trading days immediately preceding the Final
Maturity Date, as reported in the Wall Street Journal (or, if
not so reported, as determined in good faith by a majority of
the disinterested members of the Board of Directors of the
Company) (such average, the "Current Market Price"); and
(b) a Warrant to purchase that number of shares of
Common Stock equal to (i) the aggregate unpaid principal
amount of all Advances outstanding on the Final Maturity Date,
times (ii) 5%, divided by (iii) the Current Market Price on
the Final Maturity Date; such warrant to be exercisable for a
period of three years commencing on the Final Maturity Date,
at an exercise price per share equal to the Current Market
Price on the Final Maturity Date.
The provision of this paragraph 7 will be subject to
appropriate adjustments in the event of any stock split, reverse stock split, or
similar transaction affecting the Common Stock between the date hereof and the
Final Maturity Date.
8. Securities Act Legend. The securities issued pursuant to
this Agreement, including the Notes, the Restricted Shares, the Warrants, the
Loan Fee Shares, and any additional shares of Common Stock and Warrants issued
pursuant to paragraph 7 hereof, will not be registered under the Securities Act
of 1933, as amended (the "Securities Act"). Certificates representing the
Restricted Shares, shares of Common Stock issued upon exercise of Warrants, and
shares of Common Stock issued in payment of the Loan Fee or pursuant to
paragraph 7(a) shall bear a restrictive legend substantially to the effect of
the following:
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 5 of 11
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE
SECURITIES LAWS, NOR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THEY MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION THEREFROM."
9. Right to Exchange Notes. Each Purchaser shall have the
non-assignable right, exercisable upon 30 days' prior written notice to the
Company given at any time after September 1, 1997, to exchange the unpaid
principal amount of the Advances of such Purchaser, in whole or in part, for an
equal principal amount of convertible debentures of the Company having
substantially the same economic terms and conditions as the Company's existing
10% convertible debentures due March 1, 1999 (or any other convertible debt
security issued to refinance, or in substitution or exchange for, such
convertible debentures), as such terms and conditions shall be in effect at the
time of any exchange pursuant to this paragraph 9.
10. Representations and Warranties by the Company. The Company
hereby represents and warrants to each Purchaser as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and has the corporate power and authority
to execute, deliver and perform its obligations under this
Agreement, the Notes, the Warrants and the Pledge Agreement.
(b) The execution and delivery by the Company of this
Agreement, the Notes, the Warrants and the Pledge Agreement,
and the performance by the Company of its obligations
hereunder and thereunder, have been duly authorized by all
requisite corporate action on the part of the Company and will
not (i) violate any provision of law, statute, rule or
regulation or any order of any court or other agency of
government, (ii) conflict with or violate the Certificate of
Incorporation or By-Laws of the Company, in each case as
amended to the date hereof, or (iii) violate, conflict with or
constitute (with due notice or lapse of time or both) a
default under any indenture, mortgage, lease, license,
agreement or other contract or instrument or result in the
creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon the properties or assets of the
Company or any of its subsidiaries
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 6 of 11
(other than the lien of the Stock Pledge granted hereunder and
under the Pledge Agreement), in each case if such violation,
conflict, default, lien, charge or encumbrance would have a
material adverse effect on the Company.
(c) This Agreement, the Notes and the Warrants have
been duly executed and delivered by the Company and
constitute, and the Pledge Agreement when duly executed and
delivered will constitute, the valid and legally binding
obligations of the Company, enforceable in accordance with
their respective terms, except to the extent the
enforceability thereof may be limited by applicable
bankruptcy, moratorium or similar laws affecting the rights of
creditors generally.
(d) Based in part upon the representations and
warranties of each Purchaser contained in this Agreement, no
registration or filing with, or consent or approval of, or
other action by, any federal, state or other governmental
department, commission, board, bureau, agency or
instrumentality or any third party is or will be necessary for
(a) the Company's execution and delivery of this Agreement,
the Notes and the Warrants, and the Company's performance of
its obligations hereunder and thereunder.
(e) Attached hereto as Schedule 10(e) are (i) a
memorandum dated June 19, 1997, from the Company's subsidiary
Sandia Imaging Systems Corporation, stating that division's
outstanding accounts receivable, firm orders and verbal orders
as of June 18, 1997, and (ii) a letter dated June 20, 1997,
from the Company's subsidiary Lasertechnics Marking
Corporation, stating that division's outstanding accounts
receivable and firm orders as of June 18, 1997. Such
memorandum and letter, and the attachments thereto, were
prepared by the Company in good faith and are believed by the
Company to be accurate. The accounts receivable reflected
therein represent valid accounts for goods sold and/or
services performed in the conduct of the Company's business.
(f) The Restricted Shares and the Loan Fee Shares
issued to such Purchaser hereunder are, and the Warrant
Shares, when issued upon the exercise of such Purchaser's
Warrant in accordance with the terms hereof will be, duly
authorized, validly issued, fully paid and non-assessable, and
are not subject to any pre-emptive rights.
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 7 of 11
(g) The Company is the record holder and beneficial
owner of the Pledged Shares and owns the Pledged Shares free
and clear of all liens and encumbrances, other than the lien
of the Stock Pledge created hereunder and under the Pledge
Agreement.
11. Representations and Warranties of Each Purchaser. Each
Purchaser hereby severally represents and warrants to the Company as follows:
(a) Such Purchaser is acquiring the Note, the Warrant
and the Restricted Shares to be purchased by it hereunder, and
the Loan Fee Shares issued to it pursuant to paragraph 5
hereof (collectively, the "Acquired Securities"), and, if such
Purchaser acquires Warrant Shares upon the exercise of such
Warrant, such Purchaser will be acquiring such Warrant Shares,
for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act.
(b) Such Purchaser understands that the Acquired
Securities have not been, and the Warrant Shares will not be,
registered under the Act, by reason of their issuance by the
Company in transactions exempt from the registration
requirements of the Act, and that such Acquired Securities and
Warrant Shares must be held by such Purchaser indefinitely
unless a subsequent disposition thereof is registered under
the Act or is exempt from such registration.
(c) Such Purchaser further understands that the
exemption from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Act
depends on the satisfaction of various conditions, and that,
if applicable, Rule 144 may afford the basis for sales only in
limited amounts.
(d) Such Purchaser understands that its investments
hereunder involve substantial risks and represents and
warrants that it has made such independent examination and
investigation of the Company as it has deemed necessary in
making its investment decision.
(e) Such Purchaser is able to bear the economic risk
of the investments contemplated by this Agreement and has such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the
investment contemplated by this Agreement.
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 8 of 11
12. Miscellaneous. (a) This Agreement, the Notes and the
Warrants constitute our entire agreement with respect to the subject matter
hereof, and this Agreement may not be modified or amended or any provision
hereof waived except by an instrument in writing signed by the Company and each
Purchaser.
(b) This Agreement, the Notes and the Warrants shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. The
rights of each Purchaser hereunder shall be assignable to any
holder of the Notes, provided that the right of each Purchaser
under paragraph 9 above to exchange Notes for Convertible
Debentures shall not be assignable to any person without the
prior written consent of the Company. Except as provided in
the immediately preceding sentence, this Agreement and the
rights of the Purchasers hereunder shall not be assignable and
any purported assignment thereof shall be void.
(c) This Agreement may be executed in any number of
counterparts and on separate counterparts, each of which shall
be an original instrument, but all of which together shall
constitute a single agreement. One or more signature pages
from any counterpart of this Agreement may be attached to any
other counterpart of this Agreement without in any way
changing the effect thereof. This Agreement shall be effective
as to each Purchaser, severally, when executed and delivered
by the Company and such Purchaser.
(d) All notices, requests, demands, consents,
waivers, or other communications made hereunder or under the
Notes or the Warrants to any party or holder thereof shall be
in writing and shall be deemed to have been duly given if
delivered personally or sent by nationally-recognized
overnight courier or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to such
party at the address set forth below:
if to the Company, to:
Lasertechnics, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 9 of 11
with a copy to:
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Leaf, Esq.
if to a Purchaser, to such Purchaser at its address
first set forth above,
or to such other address as the party to whom such
communication is to be given may have furnished to the other
party in writing in accordance herewith. All such notices,
requests, demands, consents, waivers or other communications
shall be deemed to have been delivered (i) in the case of
personal delivery, on the date of delivery, (ii) if sent by
overnight courier, on the next business day following the date
when send and (iii) in the case of mailing, on the third
business day following such mailing.
(e) All representations, warranties and agreements
contained herein and in the Notes and the Warrants shall
survive the execution and delivery of this Agreement and the
sale of the Notes and the Warrants hereunder.
(f) Nothing contained herein shall be construed to
prohibit either Purchaser from selling or otherwise disposing
of any Acquired Securities acquired by such Purchaser
hereunder; provided that such sale or disposition, and any and
all related offers, are made in compliance with the Securities
Act, any other applicable securities and blue sky laws, and
all applicable rules and regulations thereunder.
(g) THIS AGREEMENT AND ALL RIGHTS, OBLIGATIONS AND
LIABILITIES HEREUNDER SHALL BE CONSTRUED ACCORDING TO THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED WHOLLY THEREIN. Any judicial proceeding brought
against the Company to enforce, or otherwise in connection
with, this Agreement may be brought in any court of competent
jurisdiction in the City of New York, and, by execution and
delivery of this Agreement, the Company (i) accepts, generally
and unconditionally, the nonexclusive
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Lasertechnics, Inc.
Note Purchase Agreement, dated June 25, 1997
Page 10 of 11
jurisdiction of such courts and any related appellate court
and irrevocably agrees to be bound by any final judgment
rendered thereby in connection with this Agreement and (ii)
irrevocably waives any objection it may now or hereafter have
as to the venue of any such proceeding brought in such a court
or that such a court is an inconvenient forum.
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If the foregoing correctly sets forth your understanding of
our agreement, please so indicate by signing and returning to the Company the
enclosed counterpart of this Agreement.
Very truly yours,
LASERTECHNICS, INC.
By: /s/ E.A. Xxxx Xxxxxxxxx
-----------------------
Name: E.A. Xxxx Xxxxxxxxx
Title: VP and CFO
Each of the undersigned agrees with and accepts the foregoing terms and
provisions as of the date first above written.
XXXXXXXXXX PARTNERS L.P.
By: /s/ R.C.E. Xxxxxx
-----------------------------
Name: R.C.E. Xxxxxx
Title: General Partner
X.X. XXXXXX INVESTMENT CORPORATION
By:
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Name:
Title:
