<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
Lasertechnics, Inc.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
--------------------------------------------------------------------------------
(Title of Class of Securities)
518082 10 2
--------------------
(CUSIP Number)
Carolyn L. Monroe-Koatz, J.P. Morgan & Co. Incorporated,
60 Wall Street, New York, New York 10260 (212) 648-6151
-------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 10, 1995
--------------------
(Date of Event which
Requires Filing of this
Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following box. __
Check the following box if a fee is being paid with the
statement. (A fee is not required only if the reporting person:
(1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosure provided in a
prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act but shall be subject to all other
provisions of the Act (however, see the Notes).
(Continued on following page(s))
Page 1 of 123 Pages
<PAGE> 2
1 Name of Reporting Person
S.S. or I.R.S. Identification
No. of Above Person
J.P. Morgan & Co. Incorporated
2 Check the Appropriate Box if a Member (a)
---
of a Group* (b) x
---
3 SEC Use Only
4 Source of Funds*
OO
5 Check box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
Number of Shares 7 Sole Voting Power
Beneficially Owned -0-
Each Reporting Person With
8 Shared Voting Power
13,515,687
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
7,605,891
11 Aggregate Amount Beneficially Owned
by Each Reporting Person
7,605,891
12 Check box if the Aggregate Amount in
Row (11) Excludes Certain Shares* x
--
13 Percent of Class Represented by Amount
in Row (11)
26.5%
14 Type of Reporting Person*
HC, CO
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
1 Name of Reporting Person
S.S. or I.R.S. Identification
No. of Above Person
J.P. Morgan Holdings Inc.
2 Check the Appropriate Box if a Member (a)
---
of a Group* (b) x
---
3 SEC Use Only
4 Source of Funds*
OO
5 Check box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
Number of Shares 7 Sole Voting Power
Beneficially Owned -0-
Each Reporting Person With
8 Shared Voting Power
13,515,687
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
7,605,891
11 Aggregate Amount Beneficially Owned
by Each Reporting Person
7,605,891
12 Check box if the Aggregate Amount in
Row (11) Excludes Certain Shares* x
---
13 Percent of Class Represented by Amount
in Row (11)
26.5%
14 Type of Reporting Person*
HC, CO
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
1 Name of Reporting Person
S.S. or I.R.S. Identification
No. of Above Person
J.P. Morgan Capital Corporation
2 Check the Appropriate Box if a Member (a)
---
of a Group* (b) x
---
3 SEC Use Only
4 Source of Funds*
OO
5 Check box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
Number of Shares 7 Sole Voting Power
Beneficially Owned -0-
Each Reporting Person With
8 Shared Voting Power
13,515,687
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
7,605,891
11 Aggregate Amount Beneficially Owned
by Each Reporting Person
7,605,891
12 Check box if the Aggregate Amount in
Row (11) Excludes Certain Shares* x
---
13 Percent of Class Represented by Amount
in Row (11)
26.5%
14 Type of Reporting Person*
CO
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
1 Name of Reporting Person
S.S. or I.R.S. Identification
No. of Above Person
J.P. Morgan Investment Corporation
2 Check the Appropriate Box if a Member (a)
---
of a Group* (b) x
---
3 SEC Use Only
4 Source of Funds*
WC
5 Check box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization
Delaware
Number of Shares 7 Sole Voting Power
Beneficially Owned -0-
Each Reporting Person With
8 Shared Voting Power
13,515,687
9 Sole Dispositive Power
-0-
10 Shared Dispositive Power
7,605,891
11 Aggregate Amount Beneficially Owned
by Each Reporting Person
7,605,891
12 Check box if the Aggregate Amount in
Row (11) Excludes Certain Shares* x
---
13 Percent of Class Represented by Amount
in Row (11)
26.5%
14 Type of Reporting Person*
CO
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
Amendment No. 3
to
SCHEDULE 13D FILED ON BEHALF OF J.P. MORGAN & CO. INCORPORATED,
J.P. MORGAN HOLDINGS INC., J.P. MORGAN CAPITAL CORPORATION AND
J.P. MORGAN INVESTMENT CORPORATION
J.P. Morgan & Co. Incorporated, J.P. Morgan Holdings
Inc., J.P. Morgan Capital Corporation and J.P. Morgan Investment
Corporation hereby amend and restate the Statement on Schedule
13D filed with the Securities and Exchange Commission on July 15,
1994, as amended by Amendment No. 1 thereto filed on December 30,
1994 and Amendment No. 2 thereto filed on January 9, 1995 (as
amended, the "Schedule 13D"), relating to the Common Stock of
Lasertechnics.
ITEM 1. SECURITY AND ISSUER.
The class of securities to which this statement relates
is the Common Stock, $.01 par value per share (the "Common
Stock"), of Lasertechnics, Inc. ("Lasertechnics"). Lasertechnics
is a Delaware corporation with principal executive offices at
5500 Wilshire Avenue, N.E., Albuquerque, New Mexico 87113.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by J.P. Morgan & Co.
Incorporated ("JPM"), J.P. Morgan Holdings Inc. ("Holdings"),
J.P. Morgan Capital Corporation ("JPMCC") and J.P. Morgan
Investment Corporation ("JPMIC") (individually, a "Reporting
Person" and collectively, the "Reporting Persons") with respect
to shares of Common Stock beneficially owned by the Reporting
Persons.
In addition, by reason of the agreement of Wolfensohn
Associates L.P., a Delaware limited partnership ("Wolfensohn"),
to vote in favor of certain matters discussed below, JPMIC and
Wolfensohn may be deemed to be a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") and Rule 13d-5(b) thereunder, and the
Reporting Persons may be deemed to own beneficially (as that term
is defined in Rule 13d-3 under the 1934 Act) the shares owned by
Wolfensohn which are subject to such voting agreement. The
Reporting Persons disclaim the existence of a group with
Wolfensohn and disclaim beneficial ownership of the shares of
Common Stock owned by Wolfensohn, and neither the fact of this
filing nor anything contained herein shall be construed as an
admission that a group exists or that the Reporting Persons are,
<PAGE> 7
for purposes of Section 13(d) or 13(g) if the 1934 Act, the
beneficial owners of any shares owned by Wolfensohn.
JPM is a publicly held Delaware corporation and a
registered bank holding company whose principal business and
office address is 60 Wall Street, New York, New York 10260.
Holdings is a wholly-owned subsidiary of JPM, JPMCC is a wholly-
owned subsidiary of Holdings, and JPMIC is a wholly-owned
subsidiary of JPMCC.
Holdings is a holding company incorporated in Delaware
whose principal business and office address is 902 Market Street,
Wilmington, Delaware 19801. JPMCC is a Delaware corporation and
unregistered investment company that invests either directly or
indirectly through its subsidiaries in debt and equity securities
for its own account, subject to applicable laws and regulations,
including, without limitation, the Bank Holding Company Act of
1956, as amended, and the regulations thereunder and the policies
of the Federal Reserve Board in connection therewith (the "Bank
Holding Company Act"). JPMCC's principal business and office
address is 60 Wall Street, New York, New York 10260. JPMIC is a
Delaware corporation and a registered small business investment
corporation that invests in debt and equity securities for its
own account, subject to applicable laws and regulations,
including, without limitation, the Bank Holding Company Act and
the Small Business Investment Act of 1958, as amended, and the
regulations thereunder. JPMIC's principal business and office
address is 60 Wall Street, New York, New York 10260.
Information as to each executive officer and director
of each of JPM and JPMIC is set forth on Schedule A hereto and
incorporated herein by this reference. The attached Schedule A
amends and restates the Schedule A filed with the initial
Statement on Schedule 13D filed by the Reporting Persons with
respect to the Common Stock of Lasertechnics.
None of the Reporting Persons nor, to the best of each
Reporting Person's knowledge, any person named on Schedule A
hereto, has during the last five years been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Prior to July 8, 1994, none of the Reporting Persons
beneficially owned any shares of Common Stock. Pursuant to a
<PAGE> 8
Common Stock and Convertible Note Purchase Agreement (the
"Purchase Agreement"), made as of the 8th day of July, 1994 by
and among Lasertechnics, Sandia Imaging Systems Corporation
("SIS"), a Delaware corporation and a subsidiary of
Lasertechnics, and JPMIC, on July 8, 1994, JPMIC purchased from
Lasertechnics (i) 4,900,000 shares (the "Shares") of Common Stock
for a cash purchase price of $4,655,000 and (ii) a $345,000
promissory note, the principal amount of which was initially
convertible into 363,158 shares of Common Stock (the "Convertible
Note"), for a cash purchase price of $345,000. The Convertible
Note accrued interest at the rate of 10% per annum, and any
interest that accrued thereon was convertible into additional
shares of Common Stock at a conversion price of $0.95 per share
(subject to adjustment) (the "Conversion Price"). As of November
29, 1994, the certificate of incorporation of Lasertechnics was
amended to create a class of nonvoting common stock, par value
$.01 per share ("Non-Voting Common Stock") (which is convertible
into Common Stock). As of such date, the Convertible Note
(including $13,800 of interest accrued thereon) automatically was
converted into 377,684 shares of Non-Voting Common Stock at the
Conversion Price. All of the funds used by JPMIC for the
purchase of the Shares and the Convertible Note were JPMIC's own
funds.
Pursuant to a Debt to Equity Conversion Agreement (the
"Conversion Agreement"), made as of the 10th day of May, 1995 by
and among Lasertechnics, JPMIC and Wolfensohn, JPMIC converted
two million dollars ($2,000,000) principal amount of
Lasertechnics' debt to JPMIC (incurred pursuant to the Demand
Promissory Note of Lasertechnics dated December 14, 1994 and the
Demand Promissory Note of Lasertechnics dated December 29, 1994)
and all accrued interest thereon (aggregating ninety-three
thousand dollars ($93,000)), into (A) 331,000 shares of Common
Stock and (B) 1,872,158 shares of Non-Voting Common Stock, at a
price per share of ninety-five cents ($.95).
ITEM 4. PURPOSE OF TRANSACTION.
All shares of Common Stock and Non-Voting Common Stock
acquired by JPMIC are being held solely for the purpose of
investment.
The shares of Common Stock and Non-Voting Common Stock
owned by JPMIC may be disposed of at any time or from time to
time, in whole or in part. In addition, JPM, Holdings, JPMCC,
JPMIC and their affiliates may in the future acquire additional
shares of Common Stock and Non-Voting Common Stock.
Lasertechnics and SIS each has granted to JPMIC a preemptive
right to purchase all or any part of certain securities
(including Common Stock and Non-Voting Common Stock) that
<PAGE> 9
Lasertechnics or SIS may, from time to time, propose to sell and
issue.
Lasertechnics, SIS and Wolfensohn have agreed in the
Purchase Agreement that they (and, in the case of Lasertechnics
and SIS, their respective directors) will take all steps
necessary (including, in the case of Wolfensohn and
Lasertechnics, voting all shares of Common Stock and common stock
of SIS ("SIS Common Stock") owned by them) and use their best
efforts to secure the election or appointment of a designee of
JPMIC to the Boards of Directors of Lasertechnics and SIS.
Lasertechnics and SIS also have agreed to indemnify such designee
and JPMIC and its affiliates against any liabilities arising out
of such designee's service as a director.
The Purchase Agreement provides for certain changes in
the capitalization and corporate structure of Lasertechnics and
SIS. Lasertechnics has agreed in the Purchase Agreement (i) to
use its best efforts to effect a tax-free spin-off of SIS to the
shareholders of Lasertechnics prior to December 31, 1995 (the
"Spin-Off") and (ii) to consider the desirability of effecting a
reverse split of the Common Stock at a ratio of not less than 20
to 1 (the "Reverse Split"). In addition, Lasertechnics, SIS and
Wolfensohn agreed in the Purchase Agreement that as soon as
practicable (but no later than December 31, 1995) they would take
such actions (including voting all shares of Common Stock and SIS
Common Stock owned by them in favor of such actions) as may be
required in order to amend the certificates of incorporation of
Lasertechnics and SIS (i) to create a class of nonvoting common
stock having rights substantially identical to the Common Stock
or SIS Common Stock, as applicable, except that (A) the nonvoting
common stock will have no voting rights (except in limited
circumstances) and (B) the nonvoting common stock will be
convertible in whole or in part into Common Stock or SIS Common
Stock, as applicable, provided that the holder may lawfully hold
such Common Stock or SIS Common Stock, as applicable; and (ii) to
increase the number of authorized shares of Common Stock to
accommodate the long-term interests of Lasertechnics. Such
amendment to the certificate of incorporation of Lasertechnics
was effected as of November 29, 1994.
The Purchase Agreement also provides that in the event
JPMIC desires to transfer any shares of capital stock of
Lasertechnics or SIS to any of its affiliates that is subject to
the provisions of Regulation Y of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 225) or any successor to
such regulation (a "Regulation Y Shareholder"), Lasertechnics,
SIS and Wolfensohn will take such actions as may be required in
order (i) to create a class of nonvoting common stock of
Lasertechnics or SIS; (ii) to amend the certificates of
incorporation of Lasertechnics and SIS so that the Common Stock
or SIS Common Stock, as applicable, held by a Regulation Y
<PAGE> 10
Shareholder shall be convertible into nonvoting common stock;
(iii) to exchange or convert such number of shares of Common
Stock or SIS Common Stock, as applicable, into nonvoting common
stock as JPMIC or any Regulation Y Shareholder may request; (iv)
to amend the Purchase Agreement and Shareholders Rights Agreement
(as defined in Item 6 hereof) so that certain covenants in favor
of and rights afforded to JPMIC shall run in favor of and be
afforded to such Regulation Y Shareholder; and (v) to cause
Lasertechnics or SIS, as applicable, to enter into an agreement
with such Regulation Y Shareholder providing, among other things,
for certain restrictions on such Regulation Y Shareholder's
ability to transfer shares of nonvoting common stock.
By reason of Wolfensohn's agreement with JPMIC to vote
its shares of Common Stock (or take other action) in favor of (i)
the election or appointment of JPMIC's designee to the Board of
Directors of Lasertechnics, (ii) the Spin-Off, (iii) the Reverse
Split and (iv) the charter amendments described in this Item 4,
JPMIC and Wolfensohn may be deemed to be a "group" within the
meaning of Section 13(d)(3) of the 1934 Act and Rule 13d-5(b)
promulgated thereunder, and the Reporting Persons may be deemed
to own beneficially the shares owned by Wolfensohn which are
subject to such voting agreement. The Reporting Persons disclaim
the existence of a group with Wolfensohn and disclaim beneficial
ownership of the shares of Common Stock owned by Wolfensohn, and
neither the fact of this filing nor anything contained herein
shall be construed as an admission that a group exists, or that
the Reporting Persons are, for purposes of Section 13(d) or 13(g)
of the 1934 Act, the beneficial owners of any shares owned by
Wolfensohn.
Except as set forth above, none of the Reporting
Persons nor, to the best of each Reporting Person's knowledge,
any person named on Schedule A hereto, has any plans or proposals
of the type described in (a) through (j) of Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) JPMIC directly owns 5,231,000 shares of Common
Stock, constituting approximately 19.9% of the outstanding Common
Stock (on the basis of 26,289,998 shares outstanding as of May
11, 1995). In addition, JPMIC directly owns 2,249,842 shares of
Non-Voting Common Stock which is convertible into an equal number
of shares of Common Stock. As a result of its right to acquire
Common Stock upon conversion of the Non-Voting Common Stock,
JPMIC may be deemed under Rule 13d-3(d)(1)(i)(B) under the 1934
Act, to own beneficially (as of May 11, 1995) an additional
2,249,842 shares of Common Stock, for a total of 7,480,842 shares
of Common Stock, constituting approximately 26.2% of the
outstanding Common Stock (on the basis of 28,539,840 shares
outstanding). JPMIC also owns warrants to purchase an aggregate
<PAGE> 11
of 125,049 shares of Common Stock. As a result of its right to
acquire Common Stock upon exercise of the warrants, JPMIC may be
deemed under Rule 13d-3(d)(1)(i)(A) under the 1934 Act, to own
beneficially (as of May 11, 1995) an additional 125,049 shares of
Common Stock, for a total of 7,605,891 shares of Common Stock,
constituting approximately 26.5% of the outstanding Common Stock
(on the basis of 28,664,889 shares outstanding).
As described above, JPMIC may be deemed for certain
limited purposes to be the beneficial owner of 5,909,796 shares
of Common Stock owned by Wolfensohn. Accordingly, JPMIC may be
deemed to own beneficially in the aggregate 13,515,687 shares of
Common Stock, constituting approximately 47.2% of the outstanding
Common Stock (on the basis of 28,664,889 shares outstanding). In
addition, Wolfensohn has the right to acquire 391,946 shares of
Common Stock upon exercise of options and warrants it currently
owns. Upon exercise of such options and warrants by Wolfensohn,
JPMIC also may be deemed for certain limited purposes to own
beneficially such additional shares of Common Stock. As
described above, the Reporting Persons disclaim beneficial
ownership of the shares of Common Stock owned by Wolfensohn.
JPMCC may by reason of its status as the parent of
JPMIC, be deemed to own beneficially (as that term is defined in
Rule 13d-3 under the 1934 Act) the shares of Lasertechnics of
which JPMIC possesses beneficial ownership.
Holdings may, by reason of its status as the parent of
JPMCC, be deemed to own beneficially (as that term is defined in
Rule 13d-3 under the 1934 Act) the shares of Lasertechnics of
which JPMIC possesses beneficial ownership.
JPM may, by reason of its status as the ultimate parent
of JPMIC, be deemed to own beneficially (as that term is defined
in Rule 13d-3 under the 1934 Act) the shares of Lasertechnics of
which JPMIC possesses beneficial ownership.
(b) JPM, Holdings and JPMCC share with JPMIC the power
to vote and to dispose of the 7,605,891 shares of Common Stock
beneficially owned directly by JPMIC. JPM, Holdings, JPMCC and
JPMIC may be deemed to share with Wolfensohn, for certain limited
purposes, the power to vote or to direct the vote, but not the
power to dispose or to direct the disposition of, 5,909,796
shares of Common Stock owned by Wolfensohn.
(c) Except as described in Item 3, none of the
Reporting Persons has, during the past 60 days, engaged in any
transactions in the Common Stock.
(d) JPMIC has the right to receive and the power to
direct the receipt of dividends from, and the proceeds from the
sale of, the shares of Common Stock directly owned by it. None
<PAGE> 12
of the Reporting Persons has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the
sale of, the shares of Common Stock beneficially owned by
Wolfensohn reported herein and no person other than Wolfensohn is
known to the Reporting Persons to have such right.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
As described in Item 4 hereof, Lasertechnics has agreed
in the Purchase Agreement (i) to use its best efforts to effect
the Spin-Off; (ii) to consider the desirability of effecting the
Reverse Split; and (iii) to afford JPMIC certain preemptive
rights. In addition, Lasertechnics, SIS and Wolfensohn have
agreed in the Purchase Agreement (i) to use their best efforts to
secure the election or appointment of a designee of JPMIC to the
Boards of Directors of Lasertechnics and SIS and (ii) to take
such actions as may be required in order to amend the
certificates of incorporation of Lasertechnics and SIS to create
a class of nonvoting common stock.
Concurrently with, and as a condition to, JPMIC's
purchase of the Shares and the Convertible Note under the
Purchase Agreement, JPMIC entered into a Shareholders Rights
Agreement, made as of July 8, 1994 among Lasertechnics, SIS and
Wolfensohn (the "Shareholders Rights Agreement"). Pursuant to
the Shareholders Rights Agreement, JPMIC has certain "tag-along"
rights and certain "demand" and "piggyback" registration rights
with respect to its shares of Common Stock.
On December 14, 1994, JPMIC loaned one million dollars
($1,000,000) to Lasertechnics pursuant to a letter agreement (the
"12/14 Letter Agreement") and Demand Promissory Note (the "12/14
Note"), each dated as of December 14, 1994. The 12/14 Note
accrued interest at the rate of twelve percent (12%) per annum.
The 12/14 Note was payable on demand by JPMIC and became due and
payable, in any event, on the first anniversary thereof. The
12/14 Note provided that in the event Lasertechnics completed an
equity financing of five million dollars ($5,000,000) or more on
or before June 13, 1995, then JPMIC would have the option to
convert the outstanding principal of and accrued interest on the
12/14 Note into Common Stock or the other equity securities of
Lasertechnics issued in such equity financing (or, at the option
of JPMIC, equivalent non-voting securities), at the price per
security paid by the investors in such equity financing.
In connection with the 12/14 Note, Lasertechnics
granted to JPMIC a Common Stock Purchase Warrant (the "12/14
<PAGE> 13
Warrant") to purchase 58,824 shares of Common Stock at a price
equal to the lesser of (i) $1.70 and (ii) if Lasertechnics
completes an equity financing on or prior to June 13, 1995, the
price per share at which shares of Common Stock are issued in
such financing (or, if such financing involves convertible or
exchangeable securities, the price at which such securities may
be converted into or exchanged for Common Stock). The Warrant
provides for customary anti-dilution adjustments. The Warrant is
exercisable at any time and from time to time on or before
December 13, 1999.
On December 29, 1994, JPMIC loaned an additional one
million dollars ($1,000,000) to Lasertechnics pursuant to a
letter agreement (the "12/29 Letter Agreement") and Demand
Promissory Note (the "12/29 Note"), each dated as of December 29,
1994. The 12/29 Note accrued interest at the rate of twelve
percent (12%) per annum. The 12/29 Note was payable on demand by
JPMIC and became due and payable, in any event, on the first
anniversary thereof. The 12/29 Note provided that in the event
Lasertechnics completed an equity financing of five million
dollars ($5,000,000) or more on or before June 28, 1995, then
JPMIC would have the option to convert the outstanding principal
of and accrued interest on the 12/29 Note into Common Stock or
the other equity securities of Lasertechnics issued in such
equity financing (or, at the option of JPMIC, equivalent non-
voting securities), at the price per security paid by the
investors in such equity financing.
In connection with the 12/29 Note, Lasertechnics
granted to JPMIC a Common Stock Purchase Warrant (the "12/29
Warrant") to purchase 66,225 shares of Common Stock at a price
equal to the lesser of (i) $1.51 and (ii) if Lasertechnics
completes an equity financing on or prior to June 28, 1995, the
price per share at which shares of Common Stock are issued in
such financing (or, if such financing involves convertible or
exchangeable securities, the price at which such securities may
be converted into or exchanged for Common Stock). The 12/29
Warrant provides for customary anti-dilution adjustments. The
12/29 Warrant is exercisable at any time and from time to time on
or before December 28, 1999.
As described in Item 3 hereof, the 12/14 Note and 12/29
Note (along with all accrued interest on each of the 12/14 Note
and 12/29 Note) were converted into Common Stock and Non-Voting
Common Stock pursuant to the Conversion Agreement.
The Conversion Agreement described in Item 3 above
provides that JPMIC shall have the benefit of the "demand" and
"piggyback" registration rights and other rights provided in the
Shareholders Rights Agreement with respect to the shares acquired
by JPMIC pursuant to the Conversion Agreement.
<PAGE> 14
Except as disclosed in this statement or the documents
referred to herein, there are no contracts, arrangements, under-
standings or relationships (i) among JPM, Holdings, JPMCC or
JPMIC or between them and any other person with respect to the
securities of Lasertechnics or (ii) to the best knowledge of each
Reporting Person, among the persons named on Schedule A hereto,
or between such persons and any other person with respect to any
securities of Lasertechnics.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Exhibit I - Purchase Agreement
2. Exhibit II - Convertible Promissory Note
3. Exhibit III - Shareholders Rights Agreement
4. Exhibit IV - Indemnification Letter
5. Exhibit V - 12/14 Letter Agreement
6. Exhibit VI - 12/14 Demand Promissory Note
7. Exhibit VII - 12/14 Common Stock Purchase Warrant
8. Exhibit VIII - 12/29 Letter Agreement
9. Exhibit IX - 12/29 Demand Promissory Note
10. Exhibit X - 12/29 Common Stock Purchase Warrant
11. Exhibit XI - Conversion Agreement
<PAGE> 15
SIGNATURE
After reasonable inquiry and to the best of each of the
undersigned's knowledge and belief, each of the undersigned
certifies that the information set forth in this statement is
true, complete and correct.
Dated: May 19, 1995
J.P. MORGAN & CO. INCORPORATED
By: /s/ Kathleen A. Juhase
-----------------------------
Name: Kathleen A. Juhase
--------------------------
Title: Vice President and AGC
--------------------------
J.P. MORGAN HOLDINGS INC.
By: /s/ James C.P. Berry
-----------------------------
Name: James C.P. Berry
-----------------------------
Title: Vice President and Secretary
-----------------------------
J.P. MORGAN CAPITAL CORPORATION
By: /s/ Ann T. Schoenstein
-----------------------------
Name: Ann T. Schoenstein
--------------------------
Title: Manager and Director
--------------------------
J.P. MORGAN INVESTMENT CORPORATION
By: /s/ Ann T. Schoenstein
-----------------------------
Name: Ann T. Schoenstein
--------------------------
Title: Manager and Director
-------------------------
<PAGE> 16
Schedule A
J.P. Morgan Investment Corporation ("JPMIC") is
controlled by J.P. Morgan & Co. Incorporated ("JPM"), J.P. Morgan
Holdings Inc. ("Holdings") and J.P. Morgan Capital Corporation
("JPMCC"). JPM is a publicly held Delaware corporation and a
bank holding company whose principal business and office address
is 60 Wall Street, New York, New York 10260. JPM owns all of the
capital stock of Holdings, a Delaware corporation and a holding
company whose principal business and office address is 902 Market
Street, Wilmington, Delaware 19801. Holdings in turn owns all of
the capital stock of JPMCC. JPMCC is a Delaware corporation and
an unregistered investment company whose principal business and
office address is 60 Wall Street, New York, New York 10260.
JPMCC owns all of the capital stock of JPMIC.
Executive Officers and Directors (*)
of
J.P. Morgan & Co. Incorporated
The names of the Directors and names and titles of the
Executive Officers of J.P. Morgan & Co. Incorporated ("JPM") and
their business addresses and present principal occupations are
set forth below. If no address is given, the Director's or
Officer's business address is that of JPM. Unless otherwise
indicated, each occupation set forth opposite an individual's
name refers to JPM and each individual is a citizen of the United
States. An asterisk next to a name indicates a Director of JPM.
<TABLE>
<CAPTION>
Name, Residence or
Business Address Present Principal Occupation
--------------------------- ----------------------------
<S> <C>
Martin Feldstein President, Chief Executive
National Bureau of Economic Officer and Director of National
Research Inc. Bureau of Economic Research Inc.
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
Hanna H. Gray* President Emeritus and Harry Pratt
The University of Chicago Judson Distinguished Service
Department of History Professor of History of the
1126 East 59th Street University of Chicago
5801 S. Ellis Avenue
Chicago, IL 60637
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
James R. Houghton* Chairman of the Board and Chief
Corning Incorporated Executive Officer and Director of
HQ E2-08 Corning Incorporated
Corning, NY 14831
James L. Ketelsen* Retired Chairman and Chief
Tenneco Inc. Executive Officer of Tenneco Inc.
P. O. Box 2511 (diversified industrial)
Houston, TX 77252-2511
William S. Lee* Chairman Emeritus of Duke Power
Duke Power Company Company (public utility)
P.O. Box 1006
Charlotte, NC 28201-1006
Robert G. Mendoza* Vice Chairman of the Board
Lee R. Raymond* Chairman of the Board and Chief
Exxon Corporation Executive Officer and Director of
225 E. John W. Carpenter Exxon Corporation
Freeway
Irving, TX 75062
Richard D. Simmons* President and Director of
International Herald Tribune International Herald Tribune
1150 15th Street, N.W.
Washington, D.C. 20071
John G. Smale* Chairman of the
The Procter & Gamble Company Board of Directors and Director of
P.O. Box 599 General Motors Corporation.
Cincinnati, OH 45201-0599 Retired Chairman of the Board and
Chief Executive and Director of The
Procter & Gamble Company
Kurt F. Viermetz** Vice Chairman of the Board
Rodney B. Wagner* Vice Chairman of the Board
Douglas A. Warner III* Chairman of the Board and President
Dennis Weatherstone*** Retired Chairman of the Board
Douglas C. Yearley* Chairman, President, Chief
Phelps Dodge Corporation Executive Officer and Director of
2600 N. Central Avenue Phelps Dodge Corporation
Phoenix, AZ 85004-3014
James T. Flynn Chief Financial Officer
</TABLE>
<PAGE> 18
<TABLE>
<S> <C>
Edward J. Kelly III General Counsel and Secretary
Michael E. Patterson Chief Administrative Officer
David H. Sidwell Managing Director and Controller
Peter B. Smith Chairman, Credit Policy Committee
Stephen G. Thieke Chairman, Market Risk Committee
</TABLE>
-----------------------
**Non U.S. Citizen
***Dual Citizenship - U.S. and U.K.
<PAGE> 19
J.P. Morgan Investment Corporation
The names of the Directors and names and titles of the
Executive Officers of J.P. Morgan Investment Corporation
("JPMIC") and their business addresses and present principal
occupations are set forth below. Unless otherwise indicated,
each individual is a citizen of the United States. An asterisk
next to a name indicates a Director of JPMIC. References under
this heading to "J.P. Morgan" refer to J.P. Morgan & Co.
Incorporated.
<TABLE>
<CAPTION>
Name, Residence Present Principal
or Business Address Occupation
------------------- -----------------
<S> <C>
Leigh Anderson* Manager and Director, JPMIC
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260-0060
David M. Cromwell*
J.P. Morgan Investment Corporation Managing Director and
60 Wall Street Director, JPMIC
New York, New York 10260-0060
C. Seth Cunningham* Managing Director and
J.P. Morgan Investment Corporation Director, JPMIC
60 Wall Street
New York, New York 10260-0060
Ramon De Olivera-Cezar* Director and Chairman of
J.P. Morgan Investment Corporation the Board, JPMIC
60 Wall Street
New York, New York 10260-0060
Charles Ewald* Manager and Director,
J.P. Morgan Investment Corporation JPMIC
60 Wall Street
New York, New York 10260-0060
Peter Gleason* Manager and Director,
J.P. Morgan Investment Corporation JPMIC
60 Wall Street
New York, New York 10260-0060
Meryl D. Hartzband* Managing Director and
J.P. Morgan Investment Corporation Director, JPMIC
60 Wall Street
New York, New York 10260-0060
</TABLE>
<PAGE> 20
<TABLE>
<S> <C>
Donald Patrick* Director, Manager and
J.P. Morgan Investment Corporation Secretary, JPMIC
60 Wall Street
New York, New York 10260-0060
Thomas S. Quinn* Managing Director and
J.P. Morgan Investment Corporation Director, JPMIC
60 Wall Street
New York, New York 10260-0060
Ann Schoenstein* Director, Manager and
J.P. Morgan Investment Corporation Treasurer, JPMIC
60 Wall Street
New York, New York 10260-0060
Thomas M. Snell* Managing Director and
J.P. Morgan Investment Corporation Director, JPMIC
60 Wall Street
New York, New York 10260-0060
John Watkins* Manager and Director,
J.P. Morgan Investment Corporation JPMIC
60 Wall Street
New York, New York 10260-0060
Brian F. Watson* President, Chief Executive
J.P. Morgan Investment Corporation Officer, Managing Director and
60 Wall Street Director, JPMIC
New York, New York 10260-0060
Christopher Bishko Assistant Secretary, JPMIC
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260-0060
Marilyn S. Eiss Assistant Secretary, JPMIC
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260-0060
Mark Hulak Assistant Secretary, JPMIC
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260-0060
John Van Hooser Assistant Secretary, JPMIC
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260-0060
</TABLE>
<PAGE> 21
EXHIBIT I
COMMON STOCK AND CONVERTIBLE NOTE
PURCHASE AGREEMENT
<PAGE> 22
TABLE OF CONTENTS
1. Purchase and Sale of Common Stock and Convertible Note. . . . 1
1.1 Sale and Issuance of Common Stock and Convertible Note . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties of the Company . . . . . . . . 2
2.1 Organization, Good Standing and Qualification. . . . . . 2
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Authorization. . . . . . . . . . . . . . . . . . . . . . 4
2.5 Valid Issuance of Securities and Conversion Stock. . . . 4
2.6 Governmental Consents. . . . . . . . . . . . . . . . . . 5
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Employee Confidentiality Agreements. . . . . . . . . . . 6
2.9 Patents and Trademarks . . . . . . . . . . . . . . . . . 6
2.10 Compliance with Other Instruments. . . . . . . . . . . . 7
2.11 Agreements; Action . . . . . . . . . . . . . . . . . . . 7
2.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Form 10-K. . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Registration Rights. . . . . . . . . . . . . . . . . . . 8
2.15 Corporate Documents. . . . . . . . . . . . . . . . . . . 8
2.16 Title to Property and Assets . . . . . . . . . . . . . . 8
2.17 Financial Statements . . . . . . . . . . . . . . . . . . 9
2.18 Changes. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . 10
2.20 Tax Returns, Payments and Elections. . . . . . . . . . . 10
2.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 11
2.22 Minute Books . . . . . . . . . . . . . . . . . . . . . . 11
2.23 Labor Agreements and Actions . . . . . . . . . . . . . . 11
2.24 Section 83(b) Elections. . . . . . . . . . . . . . . . . 11
2.25 Small Business Concern . . . . . . . . . . . . . . . . . 11
2.26 Application of Proceeds. . . . . . . . . . . . . . . . . 12
2.27 Not an Investment Company. . . . . . . . . . . . . . . . 12
2.28 Sales Pipeline . . . . . . . . . . . . . . . . . . . . . 12
2.29 Director Stock Ownership . . . . . . . . . . . . . . . . 13
3. Representations and Warranties of the Investor. . . . . . . . 13
3.1 Authorization. . . . . . . . . . . . . . . . . . . . . . 13
3.2 Purchase Entirely for Own Account. . . . . . . . . . . . 13
3.3 Disclosure of Information. . . . . . . . . . . . . . . . 13
3.4 Investment Experience. . . . . . . . . . . . . . . . . . 13
3.5 Restricted Securities. . . . . . . . . . . . . . . . . . 14
3.6 Legends. . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Conditions to the Investor's Obligations at Closing . . . . . 14
4.1 Representations and Warranties . . . . . . . . . . . . . 14
4.2 Performance. . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Compliance Certificate . . . . . . . . . . . . . . . . . 15
4.4 Qualifications . . . . . . . . . . . . . . . . . . . . . 15
4.5 Consents and Coordination. . . . . . . . . . . . . . . . 15
<PAGE> 23
TABLE OF CONTENTS (CONT'D)
4.6 Proceedings and Documents. . . . . . . . . . . . . . . . 15
4.7 SBIC Documents . . . . . . . . . . . . . . . . . . . . . 15
4.8 Opinion of Company Counsel . . . . . . . . . . . . . . . 15
4.9 Employee Confidentiality Agreements. . . . . . . . . . . 15
4.10 Board of Directors . . . . . . . . . . . . . . . . . . . 16
4.11 Shareholders Rights Agreement. . . . . . . . . . . . . . 16
5. Conditions to the Company's Obligations at Closing. . . . . . 16
5.1 Representations and Warranties . . . . . . . . . . . . . 16
5.2 Payment of Purchase Price. . . . . . . . . . . . . . . . 16
5.3 Qualifications . . . . . . . . . . . . . . . . . . . . . 16
6. Covenants of the Company and SIS. . . . . . . . . . . . . . . 16
6.1 Information. . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Meetings.. . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Observer Rights. . . . . . . . . . . . . . . . . . . . . 19
6.4 Certain Additional Agreements. . . . . . . . . . . . . . 20
6.5 Certain Covenants Relating to SBA Matters. . . . . . . . 21
6.6 Transfers by JPMIC to its Affiliates . . . . . . . . . . 22
6.7 Certain Covenants Relating to Corporate Matters. . . . . 24
7. Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . 25
8. Board Representation. . . . . . . . . . . . . . . . . . . . . 26
9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 27
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 Survival of Warranties. . . . . . . . . . . . . . . . . 27
10.2 Successors and Assigns. . . . . . . . . . . . . . . . . 27
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . 28
10.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . 28
10.5 Titles and Subtitles. . . . . . . . . . . . . . . . . . 28
10.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . 28
10.7 No Finder's Fee . . . . . . . . . . . . . . . . . . . . 29
10.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . 30
10.9 Amendments and Waivers. . . . . . . . . . . . . . . . . 30
10.10 Severability . . . . . . . . . . . . . . . . . . . . . 30
Exhibits
Exhibit A - Convertible Note
Exhibit B - Schedule of Exceptions
Exhibit C - Shareholders Rights Agreement
Exhibit D - Confidentiality Agreement
Exhibit E - Opinion of Counsel
Exhibit F - Regulation Y Term Sheet
Exhibit G - Indemnification Letter
<PAGE> 24
COMMON STOCK AND CONVERTIBLE NOTE
PURCHASE AGREEMENT
This Agreement ("Agreement") is made as of this 8th day of
July, 1994 by and among LASERTECHNICS, INC., a Delaware
corporation (the "Company"), SANDIA IMAGING SYSTEMS CORPORATION,
a Delaware corporation ("SIS") and J.P. MORGAN INVESTMENT
CORPORATION, a Delaware corporation ("JPMIC" or the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Common Stock and Convertible Note.
1.1 Sale and Issuance of Common Stock and Convertible
Note. Subject to the terms and conditions of this
Agreement, the Investor agrees to purchase at the Closing
(as hereinafter defined) and the Company agrees to sell and
issue to the Investor at the Closing:
(i) 4,900,000 shares (the "Shares") of common
stock, par value $.01 per share, of the Company
("Common Stock") at a price of $0.95 per share for
an aggregate purchase price of $4,655,000; and
(ii) a convertible note of the Company in the form
annexed hereto as Exhibit A (the "Convertible
Note"), in the principal amount of $345,000
bearing interest at a rate of 10% per annum and
convertible into Common Stock of the Company and,
after the certificate of incorporation of the
Company has been amended to authorize shares of
nonvoting common stock, par value $.01 per share,
of the Company ("Nonvoting Common Stock"),
convertible into such Nonvoting Common Stock, for
an aggregate purchase price of $345,000.
The Common Stock issuable upon conversion of the
Convertible Note is hereinafter referred to as the
"Conversion Common Stock", and the Nonvoting
Common Stock issuable upon conversion of the
Convertible Note is hereinafter referred to as the
"Conversion Non-Voting Common Stock" and, together
with the Conversion Common Stock, as the
"Conversion Stock". The Shares and the
Convertible Note are sometimes hereinafter
collectively referred to as the "Securities."
1.2 Closing. The purchase and sale of the Securities
shall take place at the offices of Proskauer Rose Goetz &
Mendelsohn, 1585 Broadway, New York, New York 10036, on July
8, 1994, or at such other time and place as the Company and
<PAGE> 25
the Investor mutually agree upon orally or in writing (which
time and place are designated as the "Closing"). At the
Closing, the Company shall deliver to the Investor a
certificate representing the Shares and the Convertible
Note, against delivery to the Company by the Investor of a
wire transfer in the amount of $5,000,000.
2. Representations and Warranties of the Company. Each of
the Company and SIS hereby jointly and severally represents and
warrants to, and agrees with, the Investor that, except as set
forth on the Schedule of Exceptions furnished to the Investor and
attached hereto as Exhibit B, specifically identifying the
relevant subsection hereof, which exceptions shall be deemed to
be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification.
Each of the Company and SIS, and the Company's wholly-owned
inactive subsidiary, Quantrad Corporation ("Quantrad"), is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. SIS'
wholly-owned subsidiary, Sandia Imaging Systems Europe, S.A.
("SIS Europe") was duly organized as a societe anonyme (a
corporation) and is validly in existence under the laws of
the Republic of France. Printis SARL ("Printis"), which is
a wholly-owned subsidiary of SIS (43%) and SIS Europe (57%),
was duly organized as a societe a responsabilite limitee (a
limited liability corporation) and is validly in existence
under the laws of the Republic of France. (The Company,
SIS, Quantrad, SIS Europe and Printis are sometimes
hereinafter collectively referred to as the "Companies").
Each of the Companies has all requisite power and authority
to carry on its business as now conducted and as proposed to
be conducted as described in the Company's Annual Report
under the Securities Exchange Act of 1934 on Form 10-KSB for
the year ended December 31, 1993 (the "Form 10-K"). Each of
the Company and SIS has all requisite power and authority to
enter into and perform this Agreement and the transactions
contemplated hereby. Each of the Companies is duly
qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify would
have a material adverse effect on its business or
properties.
2.2 Capitalization. (a) The authorized capital of
the Company consists of 30,000,000 shares of Common Stock,
of which 19,952,949 are issued and outstanding and 2,652,073
are reserved for issuance. Except for (A) 1,000,000 shares
of Common Stock reserved for issuance to key employees,
officers and directors of the Company under the Company's
1991 Stock Option Plan, of which 5,000 shares have been
issued, 294,000 shares currently are subject to outstanding
incentive stock option grants, and 674,874 shares currently
<PAGE> 26
are subject to outstanding non-qualified stock option
grants; (B) 65,000 shares of Common Stock reserved for
issuance to George Peterson and David Goodstein pursuant to
stock options; (C) 1,400,000 shares of Common Stock reserved
for issuance to Louis F. Bieck, Jr. pursuant to a stock
option; and (D) 110,000 shares of Common Stock reserved for
issuance pursuant to a warrant held by Redington, Inc.,
there are not outstanding (and the Company does not have any
plan to issue, grant or enter into within the next 90 days)
any options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or
acquisition from or by the Company of any shares of its
capital stock. No outstanding options, warrants or other
securities exercisable for or convertible into Common Stock
require anti-dilution adjustments by reason of the
consummation of the transactions contemplated hereby.
(b) The authorized capital of SIS consists of (A)
4,500,000 shares of common stock, par value $.01 per share
("SIS Common Stock"), of which 260,000 shares are issued and
outstanding, 440,000 shares are reserved for issuance
pursuant to stock options and 2,223,324 are reserved for
issuance upon conversion of the SIS Preferred Stock (as
hereinafter defined), and (B) 3,500,000 shares of preferred
stock, par value $.01 per share ("SIS Preferred Stock"), of
which 2,223,324 shares are issued and outstanding and no
shares are reserved for issuance. The Company owns all of
the outstanding shares of SIS Preferred Stock, and the
outstanding shares of SIS Common Stock are owned of record
by the persons specified on the Schedule of Exceptions.
Except for 200,000 shares of SIS Common Stock reserved for
issuance to key employees, officers and directors of, and
consultants to, SIS under SIS's 1994 Stock Option Plan, none
of which have been issued and 20,000 of which currently are
subject to outstanding stock option grants, there are not
outstanding (and SIS does not have any plan to issue, grant
or enter into within the next 90 days) any options,
warrants, rights (including conversion or preemptive rights)
or agreements for the purchase or acquisition from or by SIS
of any shares of its capital stock. No outstanding options,
warrants or other securities exercisable for or convertible
into SIS Common Stock require anti-dilution adjustments by
reason of the consummation of the transactions contemplated
hereby. Prior to the Closing, the Company contributed to
the capital of SIS $4,116,622.25 of intercompany debt owed
by SIS to the Company in exchange for the issuance by SIS to
the Company of 823,324 shares of SIS Preferred Stock (at a
rate of $5 per share).
(c) The authorized capital of Quantrad consists
of 500,000 shares of common stock, of which 177,865 are
issued and outstanding and owned by the Company, and no
<PAGE> 27
shares are reserved for issuance. There are not outstanding
any options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or
acquisition from or by Quantrad of any shares of its capital
stock.
(d) The authorized capital of SIS Europe consists
of 21,054 shares of common stock, all of which are issued
and outstanding and fully paid up, and owned by SIS, and
none of which shares are reserved for issuance. There are
not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the
purchase or acquisition from or by SIS Europe or Printis of
any shares of its capital stock.
2.3 Subsidiaries. Except for SIS, Quantrad, SIS
Europe and Printis, the Company does not presently own or
control, directly or indirectly, any interest in any other
corporation, association, or other business entity.
2.4 Authorization. All corporate action on the part
of the Company and SIS, and each of its respective officers,
directors and shareholders, necessary for the authorization,
execution and delivery of this Agreement and the
Shareholders Rights Agreement in the form attached hereto as
Exhibit C (the "Shareholders Rights Agreement"), the
performance of all obligations of the Company and SIS
hereunder and thereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Shares, the
Convertible Note and the Conversion Common Stock has been
taken (and, in the case of the Conversion Nonvoting Common
Stock, will be taken), and this Agreement and the
Shareholders Rights Agreement constitute valid and legally
binding obligations of the Company and SIS, enforceable in
accordance with their terms, except (i) as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights
generally, (ii) as enforceability may be limited by laws
relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to
the extent the indemnification provisions contained in the
Shareholders Rights Agreement may be limited by applicable
federal or state securities laws.
2.5 Valid Issuance of Securities and Conversion Stock.
(a) The Shares and the Convertible Note, when
issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, (i) will be
duly and validly issued and, in the case of the Shares,
fully paid and nonassessable, (ii) will be free of any
<PAGE> 28
pledges, liens, security interests, claims or other
encumbrances of any kind, and (iii) will be issued in
compliance with all applicable federal and state securities
laws. The Conversion Common Stock has been, and the
Conversion Nonvoting Common Stock will be, duly and validly
reserved for issuance and, upon issuance in accordance with
the terms of the Convertible Note, (i) will be duly and
validly issued, fully paid and nonassessable, (ii) will be
free of any pledges, liens, security interests, claims or
other encumbrances of any kind, and (iii) will be issued in
compliance with all applicable federal and state securities
laws, as presently in effect.
(b) The outstanding shares of the Common Stock
and SIS Common Stock are all duly and validly authorized and
issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities
laws.
2.6 Governmental Consents. No consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state,
local or foreign governmental authority on the part of any
of the Companies is required in connection with the
consummation of the transactions contemplated by this
Agreement and the Shareholders Rights Agreement, except for
such filings as have been made.
2.7 Litigation. There is no action, suit,
arbitration, proceeding or investigation pending or, to the
knowledge of the Company and SIS, currently threatened
against any of the Companies which questions the validity of
this Agreement or the Shareholders Rights Agreement or the
right of the Company or SIS to enter into them, or to
consummate the transactions contemplated thereby, or which
might result, either individually or in the aggregate, in
any material adverse change in the assets, condition,
affairs or prospects of any of the Companies, financially or
otherwise, or any change in the current equity ownership of
any of the Companies, nor is the Company or SIS aware that
there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or, to the
Company's and SIS's knowledge, threatened (or any basis
therefor known to the Company or SIS) involving the prior
employment of any of the Companies' employees, their use in
connection with the Companies' businesses of any information
or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with
prior employers. None of the Companies is a party or
subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or
<PAGE> 29
investigation by any of the Companies currently pending or
which any of the Companies intends to initiate.
2.8 Employee Confidentiality Agreements. Each
employee and officer of each of the Companies has executed a
Confidentiality Agreement in substantially the form attached
as Exhibit D. Neither the Company nor SIS, after reasonable
investigation, is aware that any such employee or officer is
in violation thereof, and the Company and SIS will make
reasonable efforts to prevent any such violation.
2.9 Patents and Trademarks. The Companies have
sufficient title and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for
their businesses as now conducted and as proposed to be
conducted as described in the Form 10-K without any conflict
with or infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is any of the Companies bound
by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other
person or entity. A list of all patents, patent
applications, trademarks and trademark applications is set
forth on the Schedule of Exceptions. None of the Companies
has received any communication alleging that any of the
Companies has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks,
service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity, nor
is the Company or SIS aware of any such violations. Neither
the Company nor SIS is aware that any employee of any of the
Companies is obligated under any contract (including
licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere
with the use of the employee's best efforts to promote the
interests of the Companies or that would conflict with the
Companies' businesses as proposed to be conducted. Neither
the execution nor delivery of this Agreement or the
Shareholders Rights Agreement, nor the carrying on of the
Companies' businesses by the employees of the Companies, nor
the conduct of the Companies' businesses as proposed, will,
to the knowledge of the Company or SIS, conflict with or
result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now
obligated. Neither the Company nor SIS believes that it is
or will be necessary to utilize any inventions of any of its
<PAGE> 30
employees (or people it currently intends to hire) made
prior to their employment by the Companies.
2.10 Compliance with Other Instruments.
(a) None of the Companies is in violation or
default of any provisions of its certificate of
incorporation, as amended, or bylaws, as amended, or similar
organizational documents, or of any instrument, judgment,
order, writ, decree or contract to which it is a party or by
which it is bound or, in any material respect, of any
provision of federal, state, local or foreign statute, rule
or regulation applicable to it. (Without limiting the
generality of the foregoing, the Company is in compliance in
all material respects with all federal, state and local
laws, rules and regulations regarding the manufacture and
sale of laser marking systems.) The execution, delivery and
performance of this Agreement and the Shareholders Rights
Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in any such
violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment,
order, writ, decree or contract, or require any consent,
waiver or approval thereunder, or constitute an event which
results in the creation of any lien, charge or encumbrance
upon any asset of any of the Companies.
(b) The Companies have avoided every condition,
and have not performed any act, the occurrence of which
would result in the loss by any of the Companies of any
material right granted under any license, distribution or
other agreement.
(c) Without limiting the generality of the
foregoing, the Company is in compliance with all of the
terms and conditions of, and has performed all of its
obligations under, the Patent License Agreement dated
effective as of June 1, 1988 between the Company and Patlex
Corporation.
2.11 Agreements; Action.
(a) There are no agreements, understandings or
proposed transactions between any of the Companies and any
of their officers, directors, employees, shareholders or
affiliates, or any affiliate thereof.
(b) There are no material agreements,
understandings, instruments, contracts or proposed
transactions to which any of the Companies is a party or by
which it is bound which involve (i) obligations of, or
<PAGE> 31
payments to, any of the Companies in excess of $50,000, or
(ii) the license of any patent, copyright, trade secret or
other proprietary right to or from any of the Companies.
(c) None of the Companies has (i) declared or
paid any dividends, or authorized or made any distribution
upon or with respect to any class or series of its capital
stock, (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of
$50,000, (iii) made any loans or advances to any person,
other than ordinary advances for travel expenses or loans
for stock purchases not exceeding $10,000, or (iv) sold,
exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary
course of business.
(d) To the knowledge of the Company and SIS, none
of the Companies is a party to or is bound by any contract,
agreement or instrument, or is subject to any restriction
under its certificate of incorporation, bylaws or similar
organizational documents, as the same have been amended,
which materially adversely affects its business as now
conducted or as proposed to be conducted, its properties or
its financial condition.
2.12 Disclosure. The Company has fully provided the
Investor or its counsel with all the information which the
Investor has requested for deciding whether to purchase the
Securities and all information which the Company believes is
reasonably necessary to enable the Investor to make such
decision. Neither this Agreement nor any other statements
or certificates made or delivered in connection herewith
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements
herein or therein not misleading.
2.13 Form 10-K. The Form 10-K, when taken together
with information disclosed on the Schedule of Exceptions,
does not contain any untrue statement of a material fact nor
does it omit to state a material fact necessary to make the
statements made in the Form 10-K not misleading.
2.14 Registration Rights. Except as provided in the
Shareholders Rights Agreement, neither the Company nor SIS
has granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
2.15 Corporate Documents. The certificate of
incorporation and bylaws of the Company and SIS are in the
form previously provided to counsel for the Investor.
<PAGE> 32
2.16 Title to Property and Assets. Each of the
Companies owns its property and assets free and clear of all
mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of
business and do not materially impair the ownership or use
of such property or assets. With respect to the property
and assets it leases, each of the Companies is in compliance
with such leases and, to the best knowledge of the Company
and SIS, holds a valid leasehold interest free of any liens,
claims or encumbrances.
2.17 Financial Statements. The Company has delivered
to the Investor its audited consolidated financial
statements (consolidated balance sheet and consolidated
statements of operations, stockholders' equity and cash
flows) at December 31, 1993 and for the year then ended and
its unaudited financial statements (consolidated balance
sheet and consolidated statement of operations) at and for
the three-month period ended March 31, 1994 (collectively
the "Financial Statements"). The Company also has delivered
to the Investor certain financial information for the five-
month period ended May 31, 1994 (the "Supplemental Financial
Information"). The Financial Statements and Supplemental
Financial Information are complete and correct in all
material respects and the Financial Statements have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods indicated. The Financial Statements accurately set
out and describe the financial condition and operating
results of the Companies as of the dates, and for the
periods, indicated therein, subject, in the case of the
unaudited financial statements, to normal year-end audit
adjustments which will not in the aggregate be material.
Except as set forth in the Financial Statements, the
Companies have no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course
of business subsequent to March 31, 1994 and (ii)
obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally
accepted accounting principles to be reflected in the
Financial Statements, which, individually and in the
aggregate, are not material to the financial condition or
operating results of the Companies. The Companies maintain
and will continue to maintain a standard system of
accounting established and administered in accordance with
generally accepted accounting principles.
2.18 Changes. Since March 31, 1994, there has not
been:
(a) any change in the assets, liabilities,
financial condition or operating results of the Companies
<PAGE> 33
from that reflected in the Financial Statements, except
changes in the ordinary course of business which have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting
the assets, properties, financial condition, operating
results, prospects or business of the Companies (as such
business is presently conducted and as it is proposed to be
conducted);
(c) any waiver by any of the Companies of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien,
claim or encumbrance or payment of any obligation by any of
the Companies, except in the ordinary course of business or
which is not material to the assets, properties, financial
condition, operating results or business of the Companies
(as such business is presently conducted and as it is
proposed to be conducted);
(e) any material change or amendment to a
material contract or arrangement by which any of the
Companies or any of its assets or properties is bound or
subject;
(f) other than in the ordinary course of
business, any material change in any compensation
arrangement or agreement with any employee; or
(g) to the Company's and SIS' knowledge, any
other event or condition of any character which might
materially and adversely affect the assets, properties,
financial condition, operating results or business of the
Companies (as such business is presently conducted and as it
is proposed to be conducted).
2.19 Employee Benefit Plans. None of the Companies
has nor has it ever had any Employee Benefit Plan as defined
in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
2.20 Tax Returns, Payments and Elections. Each of the
Companies has filed all tax returns and reports as required
by law. These returns and reports are true and correct in
all material respects. Each of the Companies has paid all
taxes and other assessments due, except those contested by
it in good faith which are listed in the Schedule of
Exceptions. If a provision for taxes of the Companies is
shown in the Financial Statements, then such provision is
adequate for taxes due or accrued as of the date thereof,
<PAGE> 34
and if no such provision is shown, then a provision for
taxes is not required. None of the Companies has ever
elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as a Subchapter S
corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code, nor has it made any
other elections pursuant to the Code (other than elections
which relate solely to methods of accounting, depreciation
or amortization) which would have a material effect on any
of the Companies, its financial condition, its business as
presently conducted or as proposed to be conducted or any of
its properties or material assets.
2.21 Insurance. Each of the Companies has in full
force and effect fire and casualty insurance policies, with
extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed. Each of the
Companies also has in full force and effect product
liability insurance and comprehensive general liability
insurance in amounts and with such coverages as are
generally maintained by responsible companies in the same
industry.
2.22 Minute Books. The minute books of the Companies
contain a complete summary of all meetings of directors and
shareholders since the date of incorporation and reflect all
transactions referred to in such minutes accurately in all
material respects.
2.23 Labor Agreements and Actions. None of the
Companies is bound by or subject to (and none of its assets
or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has
requested or, to the knowledge of the Company and SIS, has
sought to represent any of the employees, representatives or
agents of any of the Companies. There is no strike or other
material labor dispute involving any of the Companies
pending, or to the knowledge of the Company and SIS
threatened, nor is the Company or SIS aware of any labor
organization activity involving its employees. Neither the
Company nor SIS is aware that any officer or key employee,
or that any group of key employees, intends to terminate
their employment with any of the Companies, nor does any of
the Companies have a present intention to terminate the
employment of any of the foregoing. The employment of each
officer and employee of each of the Companies is terminable
at will.
2.24 Section 83(b) Elections. To the best of the
Company's and SIS' knowledge, all elections and notices
<PAGE> 35
required by Section 83(b) of the Code, and any analogous
provisions of applicable state tax laws have been timely
filed by all individuals who have purchased shares of the
Common Stock or SIS Common Stock which are subject to
repurchase pursuant to vesting provisions.
2.25 Small Business Concern. The Company is a "small
business concern" within the meaning of the Small Business
Investment Act of 1958, as amended, and the regulations
promulgated thereunder (the "Small Business Investment
Act"), and Part 121 of Title 13 of the United States Code of
Federal Regulations ("CFR"). The information provided by
the Company on SBA Forms 480, 652 and 1031 delivered in
connection herewith is true and correct.
2.26 Application of Proceeds. The proceeds from the
issuance and sale of the Securities pursuant hereto (the
"Proceeds") will be used by the Company to fund working
capital, for growth, modernization or expansion, and for the
repayment of certain temporary bridge loans to the Company.
From the Proceeds and the $1,000,000 proceeds from the
issuance of Common Stock to Singapore Precision Industries,
Pte. Ltd. pursuant to a letter agreement dated as of May 12,
1994, an amount not less than $3,250,000 shall be provided
by the Company to SIS, to fund marketing expenses and
working capital, and to establish a separate accounting
system for SIS. The Schedule of Exceptions includes a
detailed schedule of the intended use of the Proceeds, which
schedule is complete and correct. No portion of the
Proceeds (i) will be used to provide capital to a
corporation licensed under the Small Business Investment
Act, (ii) will be used outside the United States (except (x)
to acquire abroad materials and industrial property rights
for a domestic operation or (y) for transfer to a controlled
foreign subsidiary, so long as at least 51% of the assets
and activities of the Company will remain within the United
States), or (iii) will be used for any purpose contrary to
the public interest (including but not limited to activities
which are in violation of law) or inconsistent with free
competitive enterprise, in each case, within the meaning of
13 CFR Section 107.901. The Company's primary business activity
does not involve, directly or indirectly, providing funds to
others, the purchase or discounting of debt obligations,
factoring or long-term leasing of equipment with no
provision for maintenance or repair, and the Company is not
classified under Major Group 65 (Real Estate) of the SIC
Manual.
2.27 Not an Investment Company. None of the Companies
is an Investment Company within the meaning of the
Investment Company Act of 1940, as amended.
<PAGE> 36
2.28 Sales Pipeline. The Company has provided to the
Investor a 1994 sales pipeline, which shows in detail
projected sales for 1994 and includes a projection as to the
number of units to be sold, the expected terms, sales
prices, timing of contract finalization and timing of cash
payments, and the Company's view as to the probability of
consummation of such sales. The 1994 sales pipeline was
prepared in good faith by the Company based upon assumptions
it believes to be realistic, and nothing has come to the
attention of the Company which would lead it to believe that
the sales and terms reflected in the 1994 sales pipeline are
not realistic or attainable. The Investor understands,
however, that future sales are difficult to predict and that
actual sales may differ from the projections and such
differences may be material.
2.29 Director Stock Ownership. Each outside director
of the Company, other than any director who is an employee
or partner of an institutional investor that holds Common
Stock, directly owns not less than 10,000 shares of Common
Stock, excluding any unexercised options for Common Stock
held by such director.
3. Representations and Warranties of the Investor. The
Investor hereby represents and warrants that:
3.1 Authorization. The Investor has full corporate
power and authority to enter into this Agreement. This
Agreement constitutes the Investor's valid and legally
binding obligation, enforceable in accordance with its
terms, except (i) as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as
enforceability may be limited by laws relating to the
availability of specific performance, injunctive relief or
other equitable remedies.
3.2 Purchase Entirely for Own Account. The Securities
to be received by the Investor will be acquired for
investment for its own account, not as a nominee or agent,
and, except as contemplated by the Shareholder Rights
Agreement or otherwise in accordance with applicable
securities laws, not with a view to the resale or
distribution of any part thereof and without the present
intention of selling, granting any participation in, or
otherwise distributing the same. The Investor does not have
any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the
Securities.
<PAGE> 37
3.3 Disclosure of Information. The Investor has had
an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering
of the Securities. The foregoing, however, does not limit
or modify the representations and warranties of the Company
and SIS in Section 2 of this Agreement or the right of the
Investor to rely thereon.
3.4 Investment Experience. The Investor is an
"accredited investor" within the meaning of Rule 501 under
Regulation D of the Securities Act of 1933, as amended (the
"Act"). The Investor can bear the economic risk of its
investment and has such knowledge and experience in
financial or business matters that it is capable of
evaluating the merits and risks of the investment in the
Securities. The Investor has not been organized for the
purpose of acquiring the Securities. The Investor is a
Federal Licensee under the Small Business Investment Act of
1958.
3.5 Restricted Securities. The Investor understands
that the Securities it is purchasing are characterized as
"restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under
such laws and applicable regulations such securities may be
resold without registration under the Act only in certain
limited circumstances. In this connection, the Investor
represents that it is familiar with Rule 144 of the
Securities and Exchange Commission, as presently in effect,
and understands the resale limitations imposed thereby and
by the Act.
3.6 Legends. The Investor understands that the
certificates evidencing the Securities will bear the
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THESE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT WITH RESPECT TO SUCH SALE OR IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH
SALE MAY BE MADE PURSUANT TO RULE 144 OR SUCH
REGISTRATION OTHERWISE IS NOT REQUIRED."
Notwithstanding the foregoing, no such registration
statement or opinion of counsel shall be necessary for a
transfer by the Investor to an affiliated company if the
transferee agrees in writing to be subject to the terms
hereof to the same extent as if it were the original
Investor hereunder.
<PAGE> 38
4. Conditions to the Investor's Obligations at Closing.
The obligations of the Investor under this Agreement are subject
to the fulfillment on or before the Closing of each of the
following conditions, any of which may be waived by the Investor:
4.1 Representations and Warranties. The
representations and warranties of the Company and SIS
contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations
and warranties had been made on and as of the date of such
Closing.
4.2 Performance. The Company and SIS each shall have
performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to
be performed or complied with by it on or before the
Closing.
4.3 Compliance Certificate. The President of the
Company shall deliver to the Investor at the Closing a
certificate certifying that the conditions specified in
Sections 4.1, 4.2, 4.4, 4.5 and 4.10 have been fulfilled and
stating that there shall have been no material adverse
change in the business, affairs, prospects, operations,
properties, assets or condition of any of the Companies
since the date of the Financial Statements.
4.4 Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory
body that are required in connection with the lawful
issuance and sale of the Securities pursuant to this
Agreement shall be duly obtained and effective as of the
Closing.
4.5 Consents and Coordination. All consents and
waivers of stockholders of the Company or SIS, or other
third parties that are required in connection with this
Agreement and the Shareholders Rights Agreement, and the
consummation of the transactions contemplated hereby and
thereby, shall be duly obtained and effective as of the
Closing.
4.6 Proceedings and Documents. All corporate and
other proceedings in connection with the transactions
contemplated at the Closing and all documents incident
thereto shall be satisfactory in form and substance to the
Investor, and the Investor shall have received all such
counterpart original and certified or other copies of such
documents as it may reasonably request.
<PAGE> 39
4.7 SBIC Documents. The Company shall have completed,
executed (where applicable) and delivered to JPMIC, SBA Form
480, SBA Form 652 and SBA Form 1031.
4.8 Opinion of Company Counsel. Rubin, Katz, Salazar,
Alley & Rouse, counsel for the Company and SIS, shall have
delivered an opinion which is addressed to the Investor,
dated as of the Closing and in the form attached hereto as
Exhibit E.
4.9 Employee Confidentiality Agreements. Each
employee of the Company shall have entered into a
Confidentiality Agreement in the form attached hereto as
Exhibit D.
4.10 Board of Directors. Effective as of the Closing,
the directors of the Company shall be Eugene A. Bourque,
Richard M. Clarke, Paul J. Coleman, Jr., Richard C.E.
Morgan, Alfred E. Paulekas and C. Seth Cunningham, and the
directors of SIS shall be Jean-Pierre Arnaudo, Eugene A.
Bourque, David H. Goodstein, Richard C.E. Morgan, George
Peterson, Richard M. Clarke, Bobby J. Kelly and C. Seth
Cunningham.
4.11 Shareholders Rights Agreement. The Company, SIS
and Wolfensohn Associates L.P. shall have executed and
delivered the Shareholders Rights Agreement.
5. Conditions to the Company's Obligations at Closing.
The obligations of the Company to the Investor under this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions, any of which may be waived
by the Company:
5.1 Representations and Warranties. The
representations and warranties of the Investor contained in
Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties
had been made on and as of the Closing.
5.2 Payment of Purchase Price. The Investor shall
have delivered the purchase price specified in Section 1.1.
5.3 Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are required
in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained
and effective as of the Closing.
6. Covenants of the Company and SIS. The Company and SIS
covenant and agree with the Investor as follows:
<PAGE> 40
6.1 Information. Each of the Company and SIS
covenants and agrees that so long as the Investor or any
transferee of the Investor (in each case, together with its
a ffiliates) owns or has the right to acquire at least
500,000 shares of Common Stock or Nonvoting Common Stock of
the Company (or, in the case of a transferee of the Investor
that is not an affiliate of the Investor, 1,300,000 shares)
(or, if SIS becomes an independent company, whether by
reason of a spinoff, a public offering or otherwise, an
equivalent number of shares of SIS Common Stock) (such
number of shares to be equitably adjusted for stock splits
and reverse stock splits, subdivisions and combinations and
similar changes) (each such Investor or transferee being
sometimes hereinafter referred to as a "Major Investor"),
the Company and SIS shall deliver to such Major Investor the
information specified in this Section 6.1 unless such Major
Investor at any time specifically requests that such
information not be delivered to it.
(a) Monthly Financial Statement. As soon as
available, but in any event not later than thirty (30) days
after the end of each month, the unaudited consolidated
balance sheet as at the end of each such month of (i) the
Company and its subsidiaries as a whole, (ii) SIS and its
subsidiaries treated as a separate business (the "Imaging
Business") and (iii) the Company and its subsidiaries, other
than SIS and its subsidiaries, treated as a separate
business (the "Laser Marking Business") and, in each case,
the related unaudited consolidated statements of income and
cash flows for such month and for the elapsed period in such
fiscal year, all in reasonable detail and stating in
comparative form (x) the figures as of the end of and for
the comparable periods of the preceding fiscal year and (y)
the figures reflected in the operating budget for such
period as specified in the financial plan delivered pursuant
to paragraph (e) hereof. All such financial statements
shall be complete and correct in all material respects,
shall be prepared in accordance with generally accepted
accounting principles applied on a consistent basis
throughout the periods reflected therein except as stated
therein and except for the omission of footnotes, and shall
be accompanied by a certificate of the Company's (or, in the
case of the Imaging Business, SIS') president or chief
financial officer to such effect.
(b) Annual Financial Statements. As soon as
available, but in any event within ninety (90) days after
the end of each fiscal year, a copy of the audited
consolidated and consolidating balance sheet of the Company
and its subsidiaries (and, if SIS is then an independent
company, whether by reason of a spinoff, a public offering
or otherwise, of SIS and its subsidiaries) as at the end of
<PAGE> 41
such fiscal year and the related audited consolidated
statements of operations, stockholders' equity and cash
flows for such fiscal year, all in reasonable detail and
stating in comparative form the figures as at the end of and
for the previous fiscal year, accompanied by an opinion of
an accounting firm of recognized national standing, which
opinion shall state that such accounting firm's audit was
conducted in accordance with generally accepted auditing
standards. All such financial statements shall be complete
and correct in all material respects and prepared in
reasonable detail and in accordance with generally accepted
accounting principles applied on a consistent basis
throughout the periods reflected therein except as stated
therein.
(c) Material Litigation. Within fifteen (15)
days after the Company or SIS learns of the commencement or
written threat of commencement of any material litigation
(including, without limitation any patent litigation) or
proceeding against the Company or SIS or the assets of the
Company or SIS, or of any claim relating to environmental
matters, written notice of the nature and extent of such
litigation, proceeding or claim.
(d) Other Reports and Statements. Promptly, but
in any event within ten (10) days, after any distribution to
its shareholders generally or to specific shareholders by
agreement, to its directors, to prospective investors or to
the financial community of an annual report, proxy
statement, registration statement or other similar report or
communication or other information, a copy of each such
report, proxy statement, registration statement or other
similar report or communication or other information; and
promptly, but in any event within ten (10) days after any
filing with the Securities and Exchange Commission or with
any national securities exchange or with the National
Association of Securities Dealers, of any publicly available
annual or periodic or special report or proxy statement or
registration statement, a copy of such report or statement;
and promptly, but in any event within two (2) business days,
after released, copies of all press releases and other
statements made available generally by the Company or SIS to
the public concerning material developments.
(e) Budgets. As soon as available, but in any
event not later than thirty (30) days prior to the end of
each fiscal year, the financial plan for the Company, the
Imaging Business and the Laser Marking Business for the next
succeeding fiscal year, including but not limited to cash
flow and balance sheet projections and operating budgets,
calculated monthly; and any updates or revisions to such
plan as soon as available.
<PAGE> 42
(f) Accountants' Management Letters, etc.
Promptly after receipt, copies of all accountants'
management letters and all management and board responses to
such letters, and all certificates as to compliance,
defaults, material adverse changes, material litigation or
similar matters.
(g) Shareholders' Lists. Within ninety (90) days
after the end of each fiscal year, a list of principal
shareholders, showing the authorized and outstanding shares
by class (including the common stock equivalents of any
convertible security), the holdings of all persons that hold
more than one percent (1%) of all outstanding shares (both
before giving effect to dilution and on a fully-diluted
basis), the holdings of all officers, directors and
employees, and all outstanding options, warrants and
convertible securities, and detailing all options granted
(or, if material, expected to be granted), exercised or
lapsed (and the exercise price thereof) and all shares
issued or sold (and the price therefor).
(h) Option Plans. Within ninety (90) days after
the end of each fiscal year, and in addition to the
information requested in paragraph (g) above, copies of all
stock option plans, and a list detailing all options
granted, issued or lapsed (and the exercise price thereof);
all warrants granted or issued (whether to directors, in
connection with financings or otherwise) or lapsed (and the
exercise price thereof); and all stock issued or sold
(including in each case, without limitation, all option and
warrant exercise prices, stock issuance prices, and other
terms).
(i) Certain Agreements. Promptly, but in any
event not later than ten (10) days after execution, copies
of any material agreement entered into by the Company, SIS
or any of their subsidiaries, with any shareholder,
director, officer or managerial or executive employee of the
Company, SIS or any of their subsidiaries.
(j) Other Information and Access. From time to
time, and promptly, such additional information regarding
results or operations, financial condition, business or
prospects of the Company, SIS or its subsidiaries, including
without limitation, cash flow analyses, projections and
minutes of any meetings of the Board of Directors, as is
available to the Company or SIS which a Major Investor may
reasonably request for proper purposes. The Company and SIS
shall also afford to each Major Investor (and its
representatives) access, at reasonable times and on
reasonable prior notice, to the books, records and
properties of the Company, SIS and their subsidiaries.
<PAGE> 43
6.2 Meetings. So long as the Investor or any
transferee of the Investor is a Major Investor, the Company
(and, if SIS becomes an independent company, whether by
reason of a spinoff, a public offering or otherwise, SIS)
will hold an annual meeting of all shareholders at which
information with respect to its business will be furnished
and discussed, such meeting to be held between ninety (90)
and one hundred eighty (180) days after the end of each
fiscal year. The Company (or SIS, as applicable) will
notify each shareholder of the time and place of such annual
meeting not less than ten (10) nor more than sixty (60) days
prior to the date of such meeting.
6.3 Observer Rights. The Company or SIS, as
applicable, shall give to each Major Investor (if it does
not at that time have a designee on the Board of Directors
of the Company or SIS, as applicable) notice of each meeting
of the Board of Directors of the Company and SIS at the same
time and in the same manner as notice is given to the
directors. A designee of each Major Investor shall be
entitled to attend in person, as an observer, all meetings
held in person and to participate in telephone meetings of
the Board of Directors of the Company and SIS solely for the
purpose of allowing such Major Investor to have current
information with respect to the affairs of the Company and
SIS. The Company or SIS, as applicable, shall provide to
each Major Investor in connection with each meeting it is
entitled to attend, whether or not present at such meeting,
copies of all notices, minutes, consents, and all other
materials or information that the Company or SIS provides to
the directors with respect to such meeting, at the same time
such materials and information are given to the directors
(except that materials and information provided to directors
at meetings of the Board of Directors at which a designee of
each Major Investor is not present shall be provided to such
Major Investor promptly after the meeting). If the Board of
Directors proposes to take any action by written consent in
lieu of a meeting, the Company or SIS, as applicable, shall
give written notice thereof to each Major Investor prior to
the effective date of such consent describing in reasonable
detail the nature and substance of such action. The Company
or SIS, as applicable, shall bear all travel and related
expenses incurred by each Major Investor's designee
associated with attending meetings (whether as a director or
an observer). Any director's compensation due to a
representative of JPMIC (or an affiliate thereof) shall be
paid directly to JPMIC (or such affiliate) and not to such
representative.
6.4 Certain Additional Agreements.
<PAGE> 44
(a) Rule 144. So long as the Investor or any
transferee of the Investor is a Major Investor, the Company
(and, at such time as it is subject to the reporting
requirements of the Exchange Act, SIS) will timely file the
reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations promulgated
thereunder, to the extent required from time to time to
enable the Investor to sell the Securities (or any shares of
SIS Common Stock) without registration under the Act within
the limitation of the exemptions provided by (i) Rule 144
under the Act, as such Rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of the Investor, the
Company and SIS will deliver a written statement as to
whether it has complied with such requirements.
(b) Transaction with Affiliates. Neither the
Company, SIS nor any subsidiary of the Company or SIS shall,
directly or indirectly, enter into any transaction or
agreement with any shareholder of the Company or SIS, or
with any affiliate of the Company, SIS or of any such
shareholder, unless the transaction or agreement is reviewed
and approved by a majority of the disinterested directors of
the Board of Directors of the Company or SIS, as applicable.
(c) Publicity. Except as may be required by law,
none of the Companies shall use the name of, or make
reference to, JPMIC or any of its affiliates in any press
release or in any public manner without JPMIC's prior
written consent.
6.5 Certain Covenants Relating to SBA Matters.
(a) Use of Proceeds. The proceeds of the
issuance and sale of the Securities pursuant hereto shall be
used only as set forth in the first three sentences of
Section 2.26, and no portion of such proceeds shall be
applied to any prohibited use described in the fourth
sentence of Section 2.26. Within 30 days after the end of
each month during which the proceeds of the issuance and
sale of the Securities are being applied, each of the
Company and SIS shall provide to JPMIC a certificate of its
respective chief financial officer describing the use of
such proceeds and verifying that the use of such proceeds is
in accordance with this Section 6.5(a) and Section 2.26.
The Company and SIS each shall provide JPMIC and the Small
Business Administration access to the Company's and SIS's
books and records for the purpose of confirming the use of
proceeds. The Company acknowledges and agrees that upon any
breach of the covenants and agreements set forth in this
Section 6.5, or the representation set forth in Section
2.26, JPMIC shall be entitled (in addition to all if its
<PAGE> 45
other rights and remedies, including the right to sue for
damages) to require rescission of this Agreement and
immediate repayment in full of the purchase price for the
Securities.
(b) Business Activity. For a period of one year
following the Closing, neither the Company nor SIS shall
change its business activity if such change would render the
Company or SIS ineligible as a "Small Concern" under the
Small Business Investment Act and the regulations
thereunder. The Company acknowledges and agrees that upon
any breach of the covenant set forth in this Section 6.5(b),
JPMIC shall be entitled (in addition to all of its other
rights and remedies, including the right to sue for damages)
to require rescission of this Agreement and immediate
repayment in full of the purchase price for the Securities.
(c) Compliance. So long as JPMIC holds any
Securities or Conversion Stock, the Company will at all
times comply with the non-discrimination requirements of 13
C.F.R. Parts 112, 113 and 117.
(d) Information for SBIC Investor. Within forty-
five (45) days after the end of each fiscal year and at such
other times as JPMIC may request, the Company and SIS shall
deliver to JPMIC an assessment, in form and substance
satisfactory to JPMIC, of the economic impact of JPMIC's
financing, specifying the full-time equivalent jobs created
or retained, the impact of the financing on the Company's
and SIS's business, in terms of expanded revenue and taxes,
and other appropriate economic benefits, including, but not
limited to, technology development or commercialization,
minority business development, urban or rural business
development, expansion of exports and assistance to
manufacturing firms. Upon request, the Company and SIS
promptly (and in any event within 20 days of such request)
will furnish to JPMIC all information requested by JPMIC in
order for JPMIC to prepare and file SBA Form 468 or to
prepare an assessment of the economic impact of JPMIC's
financing, and any other information requested or required
by any governmental agency asserting jurisdiction over
JPMIC. The Company and SIS shall afford to representatives
of the Small Business Administration access to the books,
records and properties of the Company, SIS and their
subsidiaries. Upon the request of JPMIC at any time or from
time to time, the Company and SIS each shall provide to
JPMIC and the Small Business Administration a certificate of
its respective chief financial officer certifying compliance
by the Company and SIS with the provisions of this Section
6.5
<PAGE> 46
6.6 Transfers by JPMIC to its Affiliates. The
Company, SIS and the undersigned holders of Common Stock of
the Company (the "Common Shareholders") hereby covenant and
agree that, upon the request of JPMIC in connection with a
proposed transfer of shares of capital stock of the Company
or SIS from JPMIC to one or more of its affiliates that is
subject to the provisions of Regulation Y of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 225)
or any successor to such regulation (a "Regulation Y
Shareholder"), the Company, SIS and the Common Shareholders
will take such actions (including voting all shares of stock
of the Company and SIS held by them in favor of such
actions) as JPMIC may reasonably request, including, without
limitation, taking such actions as may be required in order:
(i) to amend the certificates of incorporation of
the Company and SIS to create (or if already created,
to increase as required the number of authorized shares
of) a class of nonvoting common stock having rights
substantially identical to the Common Stock or SIS
Common Stock, as applicable, except that: (A) the
nonvoting common stock shall have no voting rights
(except for voting rights with respect to any amendment
to the certificate of incorporation that would
adversely affect the class or the rights of
Regulation Y Shareholders and except as otherwise
required by law); and (B) the nonvoting common stock
shall be convertible in whole or in part into Common
Stock or SIS Common Stock, as applicable, provided that
the holder may lawfully hold such Common Stock or SIS
Common Stock, as applicable;
(ii) to amend the certificates of incorporation of
the Company and SIS so that the Common Stock and SIS
Common Stock, as applicable, held by a Regulation Y
Shareholder shall be convertible into nonvoting common
stock;
(iii) to exchange or convert such number of shares
of Common Stock and SIS Common Stock for nonvoting
common stock as JPMIC or any Regulation Y Shareholder
may request;
(iv) to amend this Agreement and the Shareholders
Rights Agreement so that (A) at the election of JPMIC
any covenant in favor of and any right afforded to
JPMIC shall run in favor of and be afforded to such
Regulation Y Shareholder (including, without
limitation, registration rights, tag-along rights,
preemptive rights and informational rights) and (B) the
covenants and agreements contained in Sections 2.26,
6.5(a) and (b), 6.7(b) and (d), and 8 of this Agreement
<PAGE> 47
shall terminate with respect to JPMIC and shall not
apply to such Regulation Y Shareholder, and neither
JPMIC nor such Regulation Y Shareholder shall be a
party to or bound by or have the right to enforce,
amend or waive such provisions; and
(v) to cause the Company and SIS to enter into an
agreement with the Regulation Y Shareholder providing
for the matters referred to in the term sheet attached
hereto as Exhibit F ("Regulation Y Term Sheet").
Without limiting the generality of the foregoing, in
connection with any such transfer by JPMIC to a Regulation Y
Shareholder, the Company, SIS and the Common Shareholders
shall take such other actions and enter into such further
agreements as JPMIC or such Regulation Y Shareholder may
reasonably request in order to permit such transfer and to
permit such Regulation Y Shareholder to comply with
regulatory limitations applicable to it.
6.7 Certain Covenants Relating to Corporate Matters.
(a) Amendments to Certificate of Incorporation;
Creation of Nonvoting Common Stock. The Company, SIS and
the Common Shareholders hereby covenant and agree that as
soon as practicable (but in any event not later than
December 31, 1995) they will take such actions (including
voting all shares of stock of the Company and SIS held by
them in favor of such actions) as may be required in order
to amend the certificates of incorporation of the Company
and SIS (i) to create a class of nonvoting common stock
having rights substantially identical to the Common Stock or
SIS Common Stock, as applicable, except that (A) the
nonvoting common stock shall have no voting rights (except
for voting rights with respect to any amendment to the
certificate of incorporation that would adversely affect the
class and except as otherwise required by law) and (B) the
nonvoting common stock shall be convertible in whole or in
part into Common Stock or SIS Common Stock, as applicable,
provided that the holder may lawfully hold such Common Stock
or SIS Common Stock, as applicable; and (ii) to increase the
number of authorized shares of Common Stock of the Company
to accommodate the long-term interests of the Company.
(b) Spin-off of SIS. The Company covenants and
agrees to use its best efforts to effect a tax-free spin-off
of SIS to the shareholders of the Company (the "SIS Spin-
off") prior to December 31, 1995.
(c) NASDAQ NMS. The Company covenants and agrees
to use all reasonable efforts to have the Common Stock
designated as NASDAQ National Market System Securities and
<PAGE> 48
included on the NASDAQ National Market System prior to
December 31, 1995.
(d) Ownership of SIS. The Company covenants and
agrees that at all times prior to the SIS Spin-off it shall
retain ownership of at least 80% of the total combined
voting power of all classes of stock of SIS entitled to vote
and at least 80% of the total number of shares of all other
classes of stock of SIS.
(e) Reverse Stock Split. The Company covenants
and agrees to consider in good faith with JPMIC the
desirability of effecting a reverse split of the Common
Stock at a ratio of not less than 20 to 1.
(f) Tax Treatment. The Company agrees that for
federal, state and local income tax purposes it shall not
claim a deduction due to any difference between the
conversion price contained in the Convertible Note and the
trading price of the Common Stock at any date.
7. Preemptive Rights. The Company and SIS hereby grant to
each Major Investor a preemptive right to purchase all or any
part of New Securities (as defined in this Section 7) which the
Company or SIS may, from time to time, propose to sell and issue.
(a) Except as set forth below, "New Securities"
shall mean any shares of capital stock of the Company or SIS
including shares of Common Stock and SIS Common Stock and
shares of preferred stock, whether now authorized or not,
and rights, options or warrants to purchase such shares of
Common Stock, SIS Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become,
convertible into such shares of Common Stock, SIS Common
Stock or preferred stock. Notwithstanding the foregoing,
"New Securities" does not include (i) securities issuable
upon exercise or conversion of currently outstanding
securities, (ii) securities offered to the public generally
pursuant to an effective registration statement under the
Act, (iii) securities issued pursuant to the acquisition of
another corporation by the Company or SIS by merger,
purchase of shares, purchase of substantially all of the
assets or other reorganization whereby the Company or SIS,
as applicable, or its shareholders acquire not less than
fifty-one percent (51%) of the voting power of such
corporation or entity, (iv) securities issued to employees,
officers and directors of, and consultants to, the Company
or SIS, pursuant to any arrangement approved by the Board of
Directors of the Company or SIS, as applicable, (v) stock
issued pursuant to any rights or agreements including
without limitation convertible securities, options and
warrants, provided that the preemptive rights established by
<PAGE> 49
this Section 7 apply with respect to the initial sale or
grant by the Company or SIS, as applicable, of such rights
or agreements or (vi) stock issued in connection with any
stock split, stock dividend or recapitalization by the
Company or SIS.
(b) In the event the Company or SIS proposes to
undertake an issuance of New Securities, it shall give each
Major Investor written notice of its intention, describing
the type of New Securities, and the price and general terms
upon which the Company or SIS, as applicable, proposes to
issue the same. The Major Investor shall have fifteen (15)
days from the date any such notice is given to agree to
purchase all or any part of such New Securities for the
price and upon the general terms specified in the notice by
giving written notice to the Company or SIS, as applicable,
and stating therein the quantity of New Securities to be
purchased.
(c) In the event the Major Investor fails to
exercise the preemptive right within such fifteen (15) day
period, the Company or SIS, as applicable, shall have ninety
(90) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within sixty (60) days
from the date of such agreement) to sell the New Securities
not elected to be purchased by the Major Investor at the
price and upon general terms no more favorable to the
purchasers of such securities than specified in the notice
given by the Company or SIS, as applicable. In the event
the Company or SIS has not sold the New Securities or
entered into an agreement to sell the New Securities within
such ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within sixty
(60) days from the date of such agreement), the Company or
SIS shall not thereafter issue or sell any New Securities,
without first offering such securities in the manner
provided above.
(d) To the extent (and only to the extent) that
the preemptive right granted under this Section 7 affords a
Major Investor the right to purchase a portion of the New
Securities that exceeds such Major Investor's pro rata share
of the New Securities (the "Excess Right"), such Excess
Right shall be subject to the Company's and SIS' right to
sell New Securities to any outside investor that the Board
of Directors of the Company or SIS, as applicable, considers
to be a strategic investor. A pro rata share, for purposes
of this Section 7(d), is the ratio that the sum of the
number of shares of Common Stock (or SIS Common Stock, as
applicable) then held by the Major Investor and the number
of such shares issuable upon conversion of the Convertible
<PAGE> 50
Note bears to the sum of the total number of shares of
Common Stock (or SIS Common Stock, as applicable) then
outstanding and the total number of such shares issuable
upon conversion of the Convertible Note.
8. Board Representation. For so long as JPMIC is a Major
Investor, the Common Shareholders, the Company and SIS, and the
directors of the Company and SIS, will take all steps necessary
(including, in the case of the Common Shareholders and the
Company, voting all shares of Common Stock and SIS Common Stock
owned by them) and use their best efforts to secure the election
by the shareholders of the Company and SIS of C. Seth Cunningham,
or such other individual as JPMIC from time to time may designate
in his place, to the Board of Directors of the Company and SIS
and, pending such election by the shareholders, will exercise all
power and authority they have under applicable law to appoint C.
Seth Cunningham or such other individual to such Boards. The
Company and SIS each agrees that it will indemnify JPMIC, and
upon the election of JPMIC's designee to the Board of Directors,
such designee, as provided in, and by execution and delivery to
JPMIC of, a letter agreement in the form attached hereto as
Exhibit G. The Company and SIS each also represents and warrants
that its certificate of incorporation and bylaws provide, and
agrees that they shall continue to provide, for indemnification
and exculpation of directors to the fullest extent permitted
under the laws of the state of Delaware. Any director's
compensation due to a representative of JPMIC (or an affiliate
thereof) shall be paid directly to JPMIC (or such affiliate) and
not to such representative.
9. Indemnification. The Company and SIS, jointly and
severally, agree to indemnify the Investor and each officer,
director, employee, agent and affiliate of the Investor (the
"Indemnified Parties") for, and hold each Indemnified Party
harmless from and against: (i) any and all damages, losses,
claims and other liabilities of any and every kind, including,
without limitation, judgments and costs of settlement, and (ii)
any and all out-of-pocket costs and expenses of any and every
kind, including, without limitation, reasonable fees and
disbursements of one counsel for such Indemnified Parties
(selected by the Investor) (all of which expenses periodically
shall be reimbursed as incurred), in each case, arising out of or
suffered or incurred in connection with (A) any investigative,
administrative or judicial proceeding or claim brought or
threatened relating to or arising out of the Investor's purchase
of the Securities, or this Agreement, the Shareholders Rights
Agreement or the transactions contemplated hereby and thereby, or
the Company's or SIS' use of the proceeds received in connection
with the sale of the Securities or (B) any inaccuracy or alleged
inaccuracy in any representation or warranty of the Company or
SIS made or incorporated by reference in this Agreement or any
breach or alleged breach by the Company or SIS of any covenant or
<PAGE> 51
agreement made or incorporated by reference in this Agreement or
the Shareholders Rights Agreement. The liability of the Company
and SIS pursuant to clause (i) of the first sentence of this
Section 9 shall be limited to $5,000,000 in the case of the
Company, and $3,250,000 in the case of SIS. The liability of the
Company and SIS pursuant to clause (ii) of the first sentence of
this Section 9 shall not be limited and shall be in addition to
the liability of the Company and SIS pursuant to clause (i) of
such sentence.
10. Miscellaneous.
10.1 Survival of Warranties. The warranties,
representations, covenants and agreements of the Company,
SIS and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by
any investigation of the subject matter thereof made by or
on behalf of the Company, SIS or the Investor.
10.2 Successors and Assigns. Subject to the share
minimums with respect to certain rights set forth in
Section 6, the Investor and each assignee of the Investor
may, without the consent of the Company or SIS, assign its
rights under this Agreement, in whole or in part, in
connection with (i) any sale or transfer to an affiliate or
(ii) in the case of a non-affiliate, a sale or transfer of
at least 1,300,000 shares of Common Stock (or an equivalent
number of shares of SIS Common Stock) (such number of shares
to be equitably adjusted for stock splits and reverse stock
splits, subdivisions and combinations and similar changes),
and the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
10.3 Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of New York (without reference to its rules as to
conflicts of law).
10.4 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
10.5 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are
<PAGE> 52
not to be considered in construing or interpreting this
Agreement.
10.6 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon receipt
by the party to be notified or five (5) days after deposit
with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party
to be notified (i) if to the Company, at the following
address:
Lasertechnics, Inc.
5500 Wilshire Avenue, N.E.,
Albuquerque, New Mexico 87113
Attn: Eugene A. Bourque, President
with a copy to:
Rubin, Katz, Salazar, Alley & Rouse
123 East Marcy, Suite 200
Santa Fe, New Mexico 87501
Attn: James B. Alley, Jr.
(ii) if to SIS, at the following address:
Sandia Imaging Systems Corporation
3208 Commander Drive
Carrollton, Texas 75006
Attn: George Peterson, President
with a copy to:
Munsch Hardt Kopf Harr & Dinan
4000 Fountain Place
Dallas, Texas 75202-2790
Attn: A. Michael Hainsfurther
(iii) if to JPMIC, at the following address:
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Attn: C. Seth Cunningham, Managing Director
with a copy to:
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Attn: Bruce Lieb
<PAGE> 53
or at such other address as any of the parties may designate
by ten (10) days' advance written notice to the other
parties.
10.7 No Finder's Fee. Each party represents that it
is not, and will not be, obligated for any finder's fee or
commission in connection with this transaction.
The Investor agrees to indemnify and hold harmless the
Company from any liability for any commission or
compensation in the nature of a finder's fee (and the costs
and expenses of defending against such liability or asserted
liability) for which the Investor or any of its officers,
employees or representatives is responsible.
The Company and SIS jointly and severally agree to
indemnify and hold harmless the Investor from any liability
for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending
against such liability or asserted liability) for which the
Company or SIS or any of their respective officers,
employees or representatives is responsible.
10.8 Expenses. The Company and SIS jointly and
severally agree to pay the fees and reasonable expenses of
counsel for JPMIC incurred in connection with this Agreement
and the transactions contemplated hereby (including the fees
and expenses of Proskauer Rose Goetz & Mendelsohn and of
special intellectual property counsel for JPMIC), including,
without limitation, any reasonable legal fees and expenses
relating to any future waiver, consent or amendment, whether
or not any such future action is given or consummated and
whether related to the Company or SIS). The Company and SIS
also jointly and severally agree to pay the reasonable fees
and expenses of accountants for JPMIC in connection with
accounting due diligence relating to the transactions
contemplated by this Agreement, and the reasonable expenses
incurred by JPMIC in connection with a background check of
key executives of the Company and SIS.
10.9 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a
particular instance and either retroactively or
prospectively), only with the written consent of JPMIC and
the Company (if such amendment or waiver adversely affects
the rights or liabilities of the Company) and/or SIS (if
such amendment or waiver adversely affects the rights or
liabilities of SIS).
<PAGE> 54
10.10 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in
accordance with its terms.
<PAGE> 55
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written
"COMPANY"
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
----------------------------
Name: E.A. Bourque
-----------------------
Title: President
----------------------
"SIS"
SANDIA IMAGING SYSTEMS CORP.
By:/s/ George Peterson
----------------------------
Name: George Peterson
----------------------
Title: President
----------------------
"INVESTOR OR JPMIC"
J.P. MORGAN INVESTMENT CORPORATION
By:/s/ C. Seth Cunningham
-----------------------------
Name: C. Seth Cunningham
Title: Managing Director
As to Sections 6.6, 6.7(a) and 8:
"COMMON SHAREHOLDERS"
WOLFENSOHN ASSOCIATES L.P.
By: WOLFENSOHN PARTNERS L.P.,
its General Partner
By:/s/ Richard C.E. Morgan
----------------------------
Name: Richard C.E. Morgan
----------------------
Title: General Partner
----------------------
<PAGE> 56
EXHIBIT II
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THIS NOTE MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT IN COMPLIANCE WITH THE ACT AND APPLICABLE
STATE SECURITIES LAWS.
LASERTECHNICS, INC.
CONVERTIBLE PROMISSORY NOTE
New York, New York
$345,000 July 8, 1994
LASERTECHNICS, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware (the
"Company"), for value received, hereby promises to pay to J.P.
Morgan Investment Corporation or its registered assigns (the
"Holder"), the principal sum of Three Hundred Forty-five Thousand
Dollars ($345,000) together with interest thereon from the date
hereof (computed on the basis of a 360-day year and actual days
elapsed) at the rate of ten percent (10%) per annum (but in no
event to exceed the maximum rate permitted under applicable
provisions of law). Subject to the provisions of Section 2
hereof relating to conversion of this Note, the principal of and
accrued interest on this Note shall be due and payable on the
earlier to occur of (i) July 8, 1999 (the "Maturity Date") and
(ii) when declared due and payable by the Holder upon the
occurrence of an Event of Default (as defined below). The
payment of principal and interest shall be made in such coin or
currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and
private debts. Principal and interest on this Note shall be paid
by wire transfer of Federal Funds in accordance with the written
instructions of the Holder or, in the absence of such
instructions, by check mailed to the Holder's address set forth
in the Purchase Agreement (as defined below). This Note is
issued pursuant to the Common Stock and Convertible Note Purchase
Agreement among the Company, Sandia Imaging Systems Corp. ("SIS")
and the Holder dated as of July 8, 1994 (the "Purchase
Agreement"), and the Holder of this Note is entitled to certain
rights and privileges set forth in the Purchase Agreement.
1. Events of Default. If any of the events specified
in this Section 1 shall occur (herein individually referred to as
an "Event of Default"), the Holder of this Note may, so long as
<PAGE> 57
such condition exists, declare the entire principal and unpaid
accrued interest hereon immediately due and payable, by notice in
writing to the Company:
(i) Default in the payment of the principal of or
accrued interest on this Note when due and payable;
(ii) Any representation or warranty made by the
Company or SIS in the Purchase Agreement shall have been
incorrect or misleading in any material respect when made;
(iii) The Company or SIS shall default in the
performance or observance of any term, covenant, condition
or agreement contained in the Purchase Agreement and, if
capable of being remedied, such default shall continue
unremedied for a period of 10 days after written notice
shall have been given by the Holder to the Company;
(iv) The institution by the Company or SIS of
proceedings to be adjudicated as bankrupt or insolvent, or
the consent by it to institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or release under
the federal Bankruptcy Act or any other applicable federal
or state law, or the consent by it to the filing of any such
petition or the appointment of a receiver, liquidator,
assignee, trustee or other similar official of the Company
or SIS or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company or SIS in
furtherance of any such action; or
(v) If, within sixty (60) days after the
commencement of an action against the Company or SIS seeking
any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar relief under any present or future
statute, law or regulation, such action shall not have been
resolved in favor of the Company or SIS, as applicable, or
all orders or proceedings thereunder affecting the
operations or the business of the Company or SIS, as
applicable, stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within
sixty (60) days after the appointment without the consent or
acquiescence of the Company or SIS of any trustee, receiver
or liquidator of the Company or SIS or of all or any
substantial part of its properties, such appointment shall
not have been vacated.
2. Conversion.
2.1 Optional Conversion. Subject to the terms
and provisions of this Section 2, the Holder shall have the
<PAGE> 58
right, at the Holder's option, at any time and from time to time,
to convert the principal amount of this Note and all accrued
interest thereon, or such portion of such principal amount
(together with all accrued interest thereon) as the Holder may
wish, into fully paid and nonassessable shares of the common
stock of the Company ("Common Stock") or, after it has been
created, Nonvoting Common Stock of the Company (as defined
below). The number of shares of Common Stock and Nonvoting
Common Stock into which this Note may be converted shall be
determined by dividing the principal amount and accrued interest
to be converted by the Conversion Price (as defined below) in
effect at the time of such conversion. The Conversion Price
shall be equal to $0.95, subject to the adjustments set forth in
Section 3.
2.2 Automatic Conversion. Pursuant to Section
6.7 of the Purchase Agreement, the Company has agreed to take
such actions as may be required in order to amend the certificate
of incorporation of the Company to create a class of nonvoting
common stock (the "Nonvoting Common Stock") having rights
substantially identical to the Common Stock, except that (A) the
Nonvoting Common Stock shall have no voting rights (except for
voting rights with respect to any amendment to the certificate of
incorporation that would adversely affect the class and except as
otherwise required by law) and (B) the Nonvoting Common Stock
shall be convertible in whole or in part into Common Stock
provided that the holder may lawfully hold such Common Stock.
(Shares of Common Stock and Nonvoting Common Stock are sometimes
hereinafter collectively referred to as "Common Shares.") On the
date of creation of a sufficient number of shares of Nonvoting
Common Stock to permit conversion of this Note, provided there is
then no Event of Default, the entire principal amount of this
Note and all accrued interest thereon automatically shall be
converted into shares of Nonvoting Common Stock (and, to the
extent the Holder so requests, Common Stock) at the Conversion
Price at the time in effect.
2.3 Partial Conversion. Upon any partial
conversion of this Note pursuant to Section 2.1, a new note for
the unconverted portion of the principal amount bearing the date
of original issue and having the same rights and privileges as
this Note shall be delivered to the Holder.
2.4 Mechanics and Effect of Conversion. No
fractional shares of Common Stock or Nonvoting Common Stock will
be issued upon conversion of this Note. In lieu of any
fractional shares to which the Holder would otherwise be
entitled, the Company will pay to the Holder the cash value of
any fractional share. To optionally convert this Note into
Common Stock or Nonvoting Common Stock pursuant to Section 2.1,
the Holder shall surrender this Note at the principal offices of
the Company, together with a written notice (the "Conversion
<PAGE> 59
Notice") to the Company of the Holder's election to convert. If
this Note automatically is converted pursuant to Section 2.2,
written notice shall be delivered to the Holder at its address
set forth in the Purchase Agreement (or otherwise given by the
Holder to the Company for the purpose of notice), notifying the
Holder of the conversion to be effected, specifying the
Conversion Price, the principal amount of the Note to be
converted, the amount of accrued interest to be converted, the
date on which such conversion will occur (the "Automatic
Conversion Date") and calling upon such Holder to surrender this
Note at the principal offices of the Company. At its expense,
the Company will, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office, a certificate or
certificates for the number of shares of Common Stock or
Nonvoting Common Stock, to which such Holder is entitled upon
such conversion, together with any other securities and property
to which the Holder is entitled upon such conversion under the
terms of this Note, including a check payable to the Holder for
any cash amounts payable as described above in respect of
fractional shares. In the event of any optional conversion of
this Note pursuant to Section 2.1, such conversion shall be
deemed to have been made immediately prior to the close of
business on the date of the surrender and delivery of this Note
and the corresponding Conversion Notice, and in the case of any
automatic conversion of this Note pursuant to Section 2.2, such
conversion shall be deemed to have been made immediately prior to
the close of business on the Automatic Conversion Date, and the
Holder shall be treated for all purposes as the record holder of
such shares of Common Stock or Nonvoting Common Stock, as
applicable, as of such date.
3. Anti-Dilution and Other Provisions.
3.1 Adjustments for Stock Dividends,
Subdivisions, Combinations and Reclassifications. In the event
the Company shall (i) pay a stock dividend or make a distribution
to holders of Common Stock in shares of its Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its shares of Common
Stock any shares of capital stock of the Company, then (A) the
Conversion Price shall be increased or decreased, as the case may
be, to an amount which shall bear the same relation to the
Conversion Price in effect immediately prior to such action as
the total number of shares outstanding immediately prior to such
action shall bear to the total number of shares outstanding
immediately after such action and (B) this Note automatically
shall be adjusted so that it thereafter shall be convertible into
the kind and number of Common Shares or other securities which
the Holder would have owned and would have been entitled to
receive after such action if this Note had been converted
immediately prior to such action or any record date with respect
<PAGE> 60
thereto. An adjustment made pursuant to this Section 3.1 shall
become effective retroactively immediately after the record date
in the case of a dividend or distribution of Common Stock and
shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
3.2 Adjustment for Certain Distributions. In the
event the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including, without
limitation, any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of (i) assets (other than cash dividends payable out
of consolidated net income or retained earnings or dividends
payable in Common Stock), (ii) equity or debt securities of the
Company (except for the Common Stock of the Company) or evidences
of indebtedness of the Company, (iii) equity or debt securities
of any corporation other than the Company (including, without
limitation, equity or debt securities of SIS) or evidences of
indebtedness of any such corporation, or (iv) subscription
rights, options or warrants to purchase any of the foregoing
assets or securities, whether or not such rights, options or
warrants are immediately exercisable (hereinafter collectively
called "Distributions on Common Stock"), the Company shall make
provisions for the Holder to receive upon conversion of this
Note, a proportional amount (depending upon the extent to which
this Note is converted) of such assets, equity or debt
securities, evidences of indebtedness or such other rights, as if
such Holder had converted this Note on or before such record
date.
3.3 Adjustment for Consolidations and Mergers.
In case of any consolidation or merger of the Company with or
into another corporation or the sale of all or substantially all
of the assets of the Company to another corporation, this Note
thereafter shall be convertible into the kind and amount of
shares of stock or other securities or property to which a holder
of the number of shares of Common Stock or Nonvoting Common Stock
of the Company issuable upon conversion of this Note would have
been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by
the Board of Directors of the Company) shall be made in the
application of the provisions in this Section 3, to the end that
the provisions set forth in this Section 3 (including provisions
with respect to changes in and adjustments of the number of
Common Shares into which this Note is convertible) shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other securities or property
thereafter deliverable upon the conversion of this Note.
3.4 Other Dilutive Events. If any event shall
occur as to which the provisions of this Section 3 shall not be
strictly applicable, but with respect to which the failure to
<PAGE> 61
make any adjustment to the Conversion Price and the number of
shares issuable upon conversion of this Note would not fairly
protect the conversion rights contained in this Note in
accordance with the intent and principles of this Section 3, upon
request of the Holder, the Company shall appoint a firm of
independent public accountants reasonably acceptable to the
Holder which shall give its opinion upon the adjustments, if any,
consistent with the intent and principles established in this
Section 3 necessary to preserve without dilution the conversion
rights represented by this Note. Upon receipt of such opinion,
the Company will promptly mail a copy thereof to the Holder and
shall make the adjustments described therein.
3.5 No Impairment. The Company will not, by
amendment of its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the
taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the Holder against
impairment.
3.6 Notices to Holder. If at any time,
(a) the Company shall take any action which would
require an adjustment pursuant to this Section 3 in the
Conversion Price or in the number of shares issuable upon
conversion of this Note; or
(b) the Company shall authorize the making to the
holders of its Common Stock of any Distributions on Common
Stock as set forth in Section 3.2; or
(c) the Company shall issue any additional shares
of Common Stock or declare any dividend (or any other
distribution) on its Common Stock; or
(d) there shall be any capital reorganization or
reclassification of the Common Stock, or any consolidation
or merger to which the Company is a party, or any sale or
transfer of all or substantially all of the assets of the
Company; or
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; then,
in any one or more of such cases, the Company shall give
written notice to the Holder, not less than 20 days before
any record date or other date set for definitive action, or
of the date on which such reorganization, reclassification,
<PAGE> 62
sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such
notice shall also set forth such facts as shall indicate the
effect of such action (to the extent such effect may be
known at the date of such notice) on the current Conversion
Price and the kind and amount of Common Shares and other
securities and property deliverable upon conversion of this
Note. Such notice shall also specify the date as of which
the holders of the Common Stock of record shall be entitled
to exchange their Common Stock for securities or other
property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
3.7 Reservation of Stock. The Company covenants
that it will at all times reserve and keep available, solely for
issuance upon conversion of this Note (and upon conversion of
Nonvoting Common Stock into which this Note has been converted)
such number of Common Shares as shall from time to time be
sufficient to effect conversion of this Note (and conversion of
Nonvoting Common Stock into which this Note has been converted).
If at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of this
Note (or the conversion of Nonvoting Common Stock into which this
Note has been converted), the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued Common Shares to such number
of shares as shall be sufficient for such purpose.
4. Miscellaneous.
4.1 The Company hereby waives presentment for
payment, demand, notice of non-payment, protest and notice of
protest.
4.2 This Note may be prepaid at any time at the
option of the Company. If this Note is prepaid prior to its
conversion pursuant to Section 2, the Company shall grant to the
Holder the right and option to acquire, through the fifth
anniversary of the date hereof, at a price equal to the
Conversion Price, the number of shares of Common Stock and/or
Nonvoting Common Stock into which this Note would have been
convertible if it had not been prepaid (including all adjustments
provided for in Section 3 of this Note).
4.3 This Note shall be binding upon the Company
and its successors and assigns and shall inure to the benefit of
the Holder and its successors, assigns and transferees.
4.4 The Company hereby promises to pay to the
Holder all costs of suit, including reasonable attorneys' fees,
<PAGE> 63
should legal proceedings be instituted at any time to collect any
amount due hereon or otherwise to enforce this Note.
4.5 This Note shall be governed by and construed
in accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law).
4.6 All headings used herein are for convenience
only and shall not be used to construe or interpret this Note.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed by its President and has caused its corporate seal to
be affixed and attested by its Secretary.
LASERTECHNICS, INC.
By: /s/ E. A. Bourque
--------------------------
Name: E.A. Bourque
Title: President
[Corporate Seal]
Attested:
/s/ Gary B. Tomlin
-----------------------------
Name: Gary B. Tomlin
Title: Assistant Secretary
<PAGE> 64
EXHIBIT III
SHAREHOLDERS RIGHTS AGREEMENT
This SHAREHOLDERS RIGHTS AGREEMENT ("Agreement") is
made as of July 8, 1994 among LASERTECHNICS, INC., a Delaware
corporation (the "Company"), SANDIA IMAGING SYSTEMS CORPORATION,
a Delaware corporation ("SIS"), J.P. MORGAN INVESTMENT
CORPORATION, a Delaware corporation ("JPMIC") and the persons and
entities listed as "Existing Investors" in the signature section
at the end of this Agreement.
RECITALS:
A. Concurrently with the execution of this Agreement,
JPMIC is acquiring from the Company 4,900,000 shares of its
common stock and a $345,000 convertible note, each pursuant to
the Common Stock and Convertible Note Purchase Agreement of even
date herewith (the "Purchase Agreement").
B. The Existing Investors currently own shares of
common stock of the Company.
C. By entering into this Agreement, the Company, SIS
and the Existing Investors wish to provide a further inducement
to JPMIC to purchase shares of common stock of the Company and
the convertible note of the Company pursuant to the Purchase
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the
parties agree as follows:
1. Tag-Along Rights.
1.1 Definitions, For purposes of this Section 1:
(a) "Common Shares" means shares of common
stock of the Company.
(b) "Common Share Equivalents" means Common
Shares outstanding, Common Shares at the time issuable upon
conversion of shares of Nonvoting Common Stock, and Common Shares
at the time issuable upon conversion of the Convertible Note (or,
without duplication, upon conversion of shares of Nonvoting
Common Stock at the time issuable upon conversion of the
Convertible Note), in each case, without regard to any
restriction on conversion that may be applicable to any
<PAGE> 65
particular holder of Nonvoting Common Stock or of the Convertible
Note.
(c) "Convertible Note" means that certain
promissory note dated the date hereof, issued by the Company to
JPMIC, in the principal amount of $345,000, and convertible into
Common Shares and, after the certificate of incorporation of the
Company has been amended to authorize shares of Nonvoting Common
Stock, convertible into shares of Nonvoting Common Stock.
(d) "Nonvoting Common Stock" means nonvoting
common stock of the Company.
(e) "Securities Act" means the Securities
Act of 1933, as amended.
1.2 Restriction on Transfer. No Existing
Investor may participate in a sale, disposition or other
transfer, in one transaction or in a series of related
transactions, of a number of Common Shares representing more than
ten percent (10%) of the outstanding Common Share Equivalents,
unless prior to the consummation thereof JPMIC shall have been
afforded the opportunity to participate in such transfer as
provided in Section 1.3. It shall be the responsibility of each
Existing Investor to determine whether any transaction to which
it is a party is subject to this Section 1. In the event that a
sale or other transfer subject to this Section 1 is to be made,
then the selling Existing Investor or group of selling Existing
Investors (the "Selling Shareholders") shall notify the person or
group of persons that proposes to acquire Common Shares (the
"Proposed Purchaser") that such sale or other transfer is subject
to this Section 1 and shall ensure that no sale or other transfer
is consummated without the Proposed Purchaser first complying
with this Section 1. The following transfers are excluded from
the restrictions of this Section 1:
(a) Transfers in a registered public
offering under the Securities Act.
(b) Transfers pursuant to Rule 144 under the
Securities Act (or any successor rule or regulation) that are in
compliance with the requirements of paragraphs (c), (e) and (f)
of the Rule, without giving effect to paragraph (k) of the Rule.
(c) Transfers without consideration to an
Existing Investor's partners or shareholders or, in the case of
an Existing Investor who is an individual, to such Existing
Investor's spouse, siblings, parents, lineal descendants or
trusts for their benefit; provided that in each case any such
transferee shall agree in writing to take subject to and to
comply with the restrictions contained in this Agreement and
<PAGE> 66
shall be deemed an Existing Investor upon consummation of such
transfer.
1.3 Right to Participate in Sale. At least
twenty (20) days (the "Notice Period") prior to the consummation
of any sale subject to this Section 1, the Proposed Purchaser
shall notify the Company in writing, and the Company shall notify
JPMIC in writing (the "Purchase Notice"), of the number of Common
Shares proposed to be purchased and the terms and conditions
(collectively, the "Offering Terms") upon which the Proposed
Purchaser has offered to purchase such Common Shares. JPMIC
shall have the right to participate in the proposed sale at the
same price per share, subject to the following terms and
conditions:
(a) JPMIC shall have the right to sell up to
that number of Common Shares (or, at the election of JPMIC,
shares of Nonvoting Common Stock) equal to the product obtained
by multiplying (i) the aggregate number of Common Shares covered
by the Purchase Notice by (ii) a fraction the numerator of which
is the number of Common Share Equivalents then owned by JPMIC and
the denominator of which is the number of Common Share
Equivalents then owned in the aggregate by all Selling
Shareholders and JPMIC.
(b) If JPMIC elects to participate in the
proposed sale, it shall give notice of such election by a writing
signed by JPMIC and stating the maximum number of Common Shares
(or, at the election of JPMIC, shares of Nonvoting Common Stock)
JPMIC desires to sell. Such notice shall be delivered to the
Proposed Purchaser prior to the end of the Notice Period.
(c) If the Proposed Purchaser is acquiring
Common Shares in a single transaction from more than one Existing
Investor or in a series of related transactions from one or more
Existing Investors, then the price per share for JPMIC's sale
shall be determined based on the highest of the prices and the
Offering Terms for JPMIC's sale shall be the most favorable of
the terms offered by the Proposed Purchaser to any Selling
Shareholder.
1.4 Sale After Notice. After lapse of the Notice
Period, the Selling Shareholders may sell to one or more
purchasers the number of Common Shares covered by the Purchase
Notice, reduced to the extent that JPMIC elects to participate,
at a price equal to or less than the price specified in the
Purchase Notice and on terms no more favorable to the Selling
Shareholders than those specified in the Purchase Notice. In the
event the Common Shares covered by the Purchase Notice are not
disposed of within ninety (90) days following the lapse of the
Notice Period, then they shall once again be subject to the tag-
along rights set forth in this Section 1.
<PAGE> 67
1.5 Stock Certificate Legend. Each certificate
representing Common Shares now or hereafter owned by the Existing
Investors shall be endorsed with the following legend until
termination of the terms of this Section:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS RIGHTS AGREEMENT BY AND AMONG THE HOLDER OF
THESE SHARES, CERTAIN INVESTORS IN THE CAPITAL STOCK OF THE
CORPORATION AND THE CORPORATION. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION."
1.6 Assignment. JPMIC and each assignee of JPMIC
may, without the Company's consent, assign in whole or in part
its tag-along rights under this Section 1 in connection with (i)
any sale or transfer to an affiliate or (ii) in the case of a
non-affiliate, any sale or transfer of at least 1,300,000 Common
Share Equivalents (equitably adjusted for stock splits and
reverse stock splits, subdivisions and combinations and similar
changes) provided that any such assignee shall agree in writing
to take subject to and to comply with the restrictions contained
in this Agreement.
1.7 SIS Tag-Along Rights. SIS and the Existing
Investors covenant and agree that at such time as JPMIC becomes
the holder of any shares of any class or series of stock of SIS
("SIS Stock"), whether as a result of a spin-off, a corporate
reorganization or otherwise, JPMIC shall have tag-along rights
with respect to the SIS Stock held by JPMIC substantially
identical to the tag-along rights provided in this Section 1 with
respect to the Common Shares and shares of Nonvoting Common Stock
held by JPMIC, mutatis mutandis. Each of the parties hereto
agrees to execute and deliver such further instruments, documents
and agreements, and to take such further actions, as JPMIC may
reasonably request in order to effectuate the foregoing.
2. Registration Rights.
2.1 Definitions. For purposes of this Section 2:
(a) "Common Shares" has the meaning set
forth in paragraph 1.1(a) hereof.
(b) "Convertible Note" has the meaning set
forth in paragraph 1.1(c).
(c) "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
(d) "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any
<PAGE> 68
registration form under the Securities Act subsequently adopted
by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by
the Company with the SEC.
(e) "Holder" means any person owning or
having the right to acquire Registrable Securities or any
assignee thereof in accordance with Section 2.13.
(f) "Initiating Holders" means the Holder(s)
initiating a registration request under Section 2.2.
(g) "Nonvoting Common Stock" has the meaning
set forth in paragraph 1.1(d) hereof.
(h) "Qualifying Request" means a request
from JPMIC or any of its permitted assignees under Section 2.13
that is specifically granted by JPMIC the right to make a
Qualifying Request, provided that such request covers the
registration of at least 500,000 Registrable Securities
(equitably adjusted for any stock splits and reverse stock
splits, subdivisions and combinations and similar changes).
(i) "Register," "registered," and
"registration" refer to a registration effected by preparing and
filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(j) "Registrable Securities" means (1) the
Common Shares purchased by JPMIC pursuant to the Purchase
Agreement; (2) the Common Shares issuable (without regard to any
restriction on conversion that may be applicable to any
particular Holder) or issued upon conversion of the Convertible
Note; (3) the Common Shares issuable (without regard to any
restriction on conversion that may be applicable to any
particular Holder) or issued upon conversion of shares of
Nonvoting Common Stock issued upon conversion of the Convertible
Note; and (4) any Common Shares issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, or upon conversion
of, such Common Shares, Nonvoting Common Stock or Convertible
Note, excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which such person's rights
under this Section 2 are not assigned.
(k) The number of shares of "Registrable
Securities then outstanding" shall be determined by the number of
Common Shares outstanding which are, and the number of Common
Shares issuable (without regard to any restriction on conversion
that may be applicable to any particular holder of Nonvoting
<PAGE> 69
Common Stock or the Convertible Note) which are, Registrable
Securities.
(l) "SEC" means the Securities and Exchange
Commission.
(m) "Securities Act" means the Securities
Act of 1933, as amended.
(n) "Violation" means any of the following
statements, omissions or violations: (i) any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement under this Section 2, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto or any documents filed
under state securities or "blue sky" laws in connection
therewith, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act
or any state securities law.
2.2 Request for Registration.
(a) If, after June 30, 1995, the Company
shall receive a written Qualifying Request that the Company file
a registration statement under the Securities Act, then the
Company shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject
to the limitations of paragraph 2.2(b) below, file and use its
best efforts to effect in accordance with this Agreement as soon
as practicable, and in any event to file and use its best efforts
to effect in accordance with this Agreement within sixty (60)
days of the receipt of such request, the registration under the
Securities Act of all Registrable Securities which the Holders
request to be registered within twenty (20) days of the mailing
of such notice by the Company in accordance with Section 3.4.
(b) If Initiating Holders intend to
distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to this Section 2.2 and the
Company shall include such information in the written notice
referred to in paragraph 2.2(a). In such event, the right of any
Holder to include such Holder's Registrable Securities in such
registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided
<PAGE> 70
herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as
provided in paragraph 2.4(e)) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority-in-interest of the
Initiating Holders; provided, however, that no such Holder shall
be required to make any representations or warranties except as
they relate to such Holder's ownership of shares and authority to
enter into the underwriting agreement, and the liability of such
Holder under the indemnification provisions of such underwriting
agreement shall be limited to an amount equal to the net proceeds
from the offering received by such Holder. Notwithstanding any
other provision of this Section 2.2, if the underwriter advises
the Initiating Holders in writing that marketing factors require
a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise the Company and the Company
shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof,
including the Initiating Holders, in proportion (as nearly as
practicable) to the amount of Registrable Securities of the
Company owned by each Holder.
(c) The Company is obligated to effect only
three (3) registrations pursuant to this Section 2.2 (registra-
tions which are withdrawn prior to their effectiveness shall not
be counted for this purpose), except that the Company is obli-
gated to effect as many registrations as may be requested by
Holders in the event and so long as a registration pursuant to
Form S-3 or any similar "short-form" registration statement is
available. The Company is not obligated to effect more than two
(2) registrations pursuant to this Section 2.2 in any eighteen
(18) month period or more than one (1) such registration in any
six (6) month period.
(d) Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting a registration
statement pursuant to this Section 2.2, a certificate signed by
the President of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for
such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of
not more than ninety (90) days after receipt of the request of
the Initiating Holders; provided, however, that the Company may
not utilize this right more than once in any twelve (12) month
period.
2.3 Company Registration. If (but without any
obligation to do so) the Company proposes to register (including
<PAGE> 71
for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other
securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as
would be required to be included in a registration statement
covering the sale of Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the
Company in accordance with Section 3.4, the Company shall,
subject to the provisions of Section 2.8, cause to be registered
under the Securities Act all of the Registrable Securities that
each such Holder has requested to be registered.
2.4 Obligations of the Company. Whenever
required under this Section 2 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a
registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to
one hundred twenty (120) days.
(b) Prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by
such registration statement.
(c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by
them.
(d) Use its best efforts to register and
qualify the securities covered by such registration statement
under such other securities or "blue sky" laws of such states or
jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such
states or jurisdictions.
<PAGE> 72
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the
managing underwriter of such offering.
(f) Notify each Holder of Registrable
Securities covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(g) Notify each Holder of Registrable
Securities covered by such registration statement and such
Holder's underwriters, if any, and confirm such advice in
writing: (i) when the registration statement has become
effective, (ii) when any post-effective amendment to the
registration statement becomes effective and (iii) of any request
by the SEC for any amendment or supplement to the registration
statement or prospectus or for additional information.
(h) Notify each Holder of Registrable
Securities if at any time the SEC should institute or threaten to
institute any proceedings for the purpose of issuing, or should
issue, a stop order suspending the effectiveness of the
Registration Statement. Upon the occurrence of any of the events
mentioned in the preceding sentence, the Company will use its
best efforts to prevent the issuance of any such stop order or to
obtain the withdrawal thereof as soon as possible. The Company
will advise each Holder of Registrable Securities promptly of any
order or communication of any public board or body addressed to
the Company suspending or threatening to suspend the
qualification of any Registrable Securities for sale in any
jurisdiction.
(i) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to
this Section 2, (i) on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 2, if such securities are
being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the
registration statement with respect to such securities becomes
effective, an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable
Securities and (ii) on the date that the registration statement
<PAGE> 73
with respect to such securities becomes effective, a letter dated
such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if
any, and to the Holders requesting registration of Registrable
Securities, and, if such securities are being sold through
underwriters, a reaffirmation of such letter on the date that
such Registrable Securities are delivered to the underwriters for
sale.
(j) As soon as practicable after the
effective date of the registration statement, and in any event
within sixteen (16) months thereafter, have "made generally
available to its security holders" (within the meaning of Rule
158 under the Securities Act) an earning statement (which need
not be audited) covering a period of at least twelve (12) months
beginning after the effective date of the registration statement
and otherwise complying with Section 11(a) of the Securities Act.
2.5 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to this Section 2 with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish
to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration
of such Holder's Registrable Securities. If any registration
statement or comparable statement under the Securities Act refers
to JPMIC or any of its affiliates, by name or otherwise, as the
holder of any securities of the Company then, unless counsel to
the Company advises the Company that the Securities Act requires
that such reference be included in any such statement, each such
holder shall have the right to require the deletion of such
reference to itself and its affiliates.
2.6 Expenses of Demand Registration. All
expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or
qualifications pursuant to Section 2.2, including (without
limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel
for the Company, and the reasonable fees and disbursements of one
counsel (selected by the Holders of a majority of the Registrable
Securities being registered) for the selling Holders shall be
borne by the Company.
2.7 Expenses of Company Registration. The
Company shall bear and pay all expenses incurred in connection
with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to Section
2.3 for each Holder, including (without limitation) all
<PAGE> 74
registration, filing, and qualification fees, printers and
accounting fees relating or apportionable thereto and the fees
and disbursements of one counsel for the selling Holders
(selected by the Holders of a majority of the Registrable
Securities being registered), but excluding underwriting
discounts and commissions relating to Registrable Securities.
2.8 Underwriting Requirements. In connection
with any offering involving an underwriting of shares being
issued by the Company, the Company shall not be required under
Section 2.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the
Company; provided, however, that no Holder participating in such
underwriting shall be required to make any representations or
warranties except as they relate to such Holder's ownership of
shares and authority to enter into the underwriting agreement,
and the liability of such a Holder under the indemnification
provisions of such underwriting agreement shall be limited to an
amount equal to the net proceeds from the offering received by
such Holder. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included
in such offering exceeds the amount of securities sold other than
by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of
such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata
among the selling shareholders according to the total amount of
securities entitled to be included therein owned by each selling
shareholder or in such other proportions as shall mutually be
agreed to by such selling shareholders), but in no event shall
any shares being sold by a shareholder exercising a demand
registration right similar to that granted in Section 2.2 be
excluded from such offering.
2.9 Delay of Registration. No Holder shall have
any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation
or implementation of this Section 2.
2.10 Indemnification. In the event any
Registrable Securities are included in a registration statement
under this Section 2:
(a) To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, its heirs,
personal representatives and assigns, each of such Holder's
<PAGE> 75
officers, directors, employees and affiliates, any underwriter
(as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon a Violation; and the
Company will pay to each such indemnified party, as incurred, any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this paragraph 2.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case to a
particular indemnified party for any such loss, claim, damage,
liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use
in connection with such registration by such indemnified party.
(b) To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages
or liabilities (joint or several) to which any of the foregoing
persons may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with
such registration; and each such Holder will pay, as incurred,
any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this paragraph 2.10(b), in
connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the
indemnity agreement contained in this paragraph 2.10(b) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided further, that, in no event
shall the liability of any Holder under this paragraph 2.10(b)
<PAGE> 76
exceed the net proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified
party under this Section 2.10 of notice of the commencement of
any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.10, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the
indemnified party under this Section 2.10 except if, and only to
the extent that, the indemnified party is actually prejudiced
thereby; and such failure to deliver written notice to the
indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this
Section 2.10.
(d) The obligations of the Company and
Holders under this Section 2.10 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 2, and otherwise.
2.11 Reports Under the Exchange Act. With a view
to making available to the Holders the benefits of Rule 144 under
the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information
available, as those terms are understood and defined in Rule 144
under the Securities Act, at all times;
(b) take such action as is necessary to
enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
<PAGE> 77
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the
Holder owns any Registrable Securities, forthwith upon request
(i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 under the Securities Act
or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time it so qualifies), (ii) a
copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration
or pursuant to such form.
2.12 Form S-3 Registration. In case the Company
shall receive from any Holder or Holders a written Qualifying
Request that the Company effect a registration on Form S-3 and
any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all
other Holders; and
(b) file and use its best efforts to effect, as
soon as practicable, such registration and all such
qualifications and compliances as may be so requested and as
would permit or facilitate the sale and distribution of all or
such portion of such Holder's or Holders' Registrable Securities
as are specified in such request, together with all or such
portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such
written notice from the Company; provided, however, that the
Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.12: (1)
if Form S-3 is not available for such offering by the Holders;
(2) if the Company shall furnish to the Holders a certificate
signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for
such Form S-3 Registration to be effected at such time, in which
event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than
seventy-five (75) days after receipt of the request of the Holder
or Holders under this Section 2.12; provided, however, that the
Company shall not utilize this right more than once in any twelve
(12) month period; (3) if the Company has, within the eighteen
<PAGE> 78
(18) month period preceding the date of such request, already
effected two (2) registrations on Form S-3 for the Holders
pursuant to this Section 2.12; or (4) in any particular
jurisdiction in which the Company would be required to qualify to
do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities
requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred
in connection with a registration requested pursuant to this
Section 2.12, including (without limitation) all registration,
filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling
Holder or Holders (selected by the Holders of a majority of the
Registrable Securities being registered) and counsel for the
Company, but excluding any underwriters' discounts or commissions
associated with Registrable Securities which shall be allocated
to or among the selling Holder or Holders pursuant to the
underwriting agreement, shall be borne by the Company.
Registrations effected pursuant to this Section 2.12 shall not be
counted as demands for registration or registrations effected
pursuant to Sections 2.2 or 2.3, respectively.
2.13 Assignment of Registration Rights. The
rights to cause the Company to register Registrable Securities
pursuant to this Section 2 may be assigned in whole or in part by
a Holder to one or more of its affiliates or to one or more
transferees or assignees of not less than 1,300,000 Registrable
Securities (equitably adjusted for any stock splits and reverse
stock splits, subdivisions and combinations and similar changes),
provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to
which such registration rights are being assigned.
2.14 Limitations on Subsequent Registration
Rights. From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a
majority of the outstanding Registrable Securities, enter into
any agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or
prospective holder (a) to include such securities in any
registration filed under Section 2.2 or Section 2.12, unless
under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only
to the extent that the inclusion of such Holder's securities will
not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared
effective prior to the date set forth in paragraph 2.2(a) or
<PAGE> 79
within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 2.2 or Section 2.12.
2.15 "Market Stand-Off" Agreement. Each Holder
hereby agrees that, during the period of ninety (90) days
following the effective date of a registration statement of the
Company filed under the Securities Act in connection with an
underwritten offering, it shall not, to the extent requested by
the Company and such underwriter, sell or otherwise transfer or
dispose of (other than to donees who agree to be similarly bound)
any Common Shares of the Company held by it except Common Shares
included in such registration; provided, however, that:
(a) such agreement shall be applicable only
to a registration statement initiated by the Company which covers
Common Shares (or other securities) to be sold on its behalf to
the public in an underwritten offering; and
(b) all officers and directors of the
Company and all other persons with registration rights (whether
or not pursuant to this Agreement) enter into similar agreements.
2.16 Amendment of Registration Rights. Any
provision of this Section 2 may be amended and the observance
thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Holders of sixty-six
and two-thirds percent (66-2/3%) of the Registrable Securities
then outstanding. Any amendment or waiver effected in accordance
with this Section 2.16 shall be binding upon each holder of
Registrable Securities at the time outstanding, each future
holder of all such securities, and the Company.
2.17 SIS Registration Rights. SIS covenants and
agrees that at such time as JPMIC becomes the holder of any
shares of any class or series of stock of SIS ("SIS Stock"),
whether as a result of a spin-off, a corporate reorganization or
otherwise, JPMIC shall have registration rights with respect to
the SIS Stock held by JPMIC substantially identical to the
registration rights provided in this Section 2 with respect to
the Common Shares held by JPMIC, mutatis mutandis. Each of the
parties hereto agrees to execute and deliver such further
instruments, documents and agreements, and to take such further
actions, as JPMIC may reasonably request in order to effectuate
the foregoing.
<PAGE> 80
3. Miscellaneous.
3.1 Entire Agreement. This Agreement constitutes
the full and entire understanding and agreement among the parties
with regard to the subject matter hereof. Nothing in this
Agreement, express or implied, is intended to confer upon any
person or entity, other than the parties hereto and their
respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
3.2 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York (without reference to its rules as to
conflicts of law).
3.3 Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto.
3.4 Notices. Unless otherwise provided, any
notice required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given upon receipt by
the party to be notified or three (3) days after deposit with the
United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified (a) if
to a party other than the Company, at such party's address set
forth at the end of this Agreement or at such other address as
such party shall have furnished the Company in writing, or, until
any such party so furnishes an address to the Company, then to
and at the address of the last holder of the shares covered by
this Agreement who has so furnished an address to the Company, or
(b) if to the Company, at its address set forth at the end of
this Agreement, or at such other address as the Company shall
have furnished to the parties in writing.
3.5 Severability. Any invalidity, illegality or
limitation on the enforceability of this Agreement or any part
thereof, by any party whether arising by reason of the law of the
respective party's domicile or otherwise, shall in no way affect
or impair the validity, legality or enforceability of this
Agreement with respect to other parties. If any provision of
this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
3.6 Titles and Subtitles. The titles of the
Sections and paragraphs of this Agreement are for convenience of
reference only and are not to be considered in construing this
Agreement.
<PAGE> 81
3.7 Delays or Omissions. It is agreed that no
delay or omission to exercise any right, power or remedy accruing
to the parties, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of any similar breach or
default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind
or character by a party of any breach or default under this
Agreement, or any waiver by a party of any provisions or
conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing
and that all remedies, either under this Agreement, or by law or
otherwise afforded to a party, shall be cumulative and not
alternative.
3.8 Attorneys' Fees. If any action at law or in
equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
3.9 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an origi-
nal, but all of which together shall constitute one instrument.
<PAGE> 82
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
LASERTECHNICS, INC.
Address:
5500 Wilshire Avenue, N.E. By:/s/ E.A. Bourque
Albuquerque, New Mexico 87113 --------------------------
Name: E.A. Bourque
Title: President
SANDIA IMAGING SYSTEMS CORP.
Address:
3208 Commander Drive By:/s/ George Peterson
Carrollton, Texas 75006 --------------------------
Name: George Peterson
----------------
Title: President
----------------
J.P. MORGAN INVESTMENT CORPORATION
Address:
60 Wall Street By:/s/ C. Seth Cunningham
New York, New York 10260 ---------------------------
Name: C. Seth Cunningham
Title: Managing Director
EXISTING INVESTORS:
WOLFENSOHN ASSOCIATES L.P.
Address: By: WOLFENSOHN PARTNERS L.P.
Its General Partner
599 Lexington Avenue, 39th Floor
New York, New York 10022
By:/s/ Richard C.E. Morgan
-----------------------------
Name: Richard C.E. Morgan
--------------------
Title: General Partner
--------------------
<PAGE> 83
EXHIBIT IV
Indemnification Letter
July 8, 1994
Mr. C. Seth Cunningham
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Dear Mr. Cunningham:
You have agreed to serve as a director of Lasertechnics,
Inc. and Sandia Imaging Systems Corp. (the "Corporations"). In
consideration of your agreement to serve in such capacities, we
have jointly and severally agreed as follows:
To the fullest extent permitted by applicable provisions of
law, the Corporations jointly and severally shall indemnify you
and J.P. Morgan Investment Corporation and its affiliates
("JPMIC") against any and all expenses (including attorneys'
fees), judgments, taxes, penalties, fines (including any excise
tax assessed with respect to any employee benefit plan) and
amounts paid in settlement incurred by you and/or JPMIC in
connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the
Corporations) to which you and/or JPMIC are, or at any time
become, or are threatened to be made, a party by reason of the
fact that you are or were or at any time become a director,
officer, employee or agent of either Corporation, or are or were
serving or at any time serve at the request of either Corporation
as a director, officer, employee or agent of another domestic or
foreign corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans. You shall be considered to be serving an employee benefit
plan at a Corporation's request if your duties to the Corporation
also impose duties on or otherwise involve services by you to the
plan or to participants in or beneficiaries of the plan. The
Corporations jointly and severally shall pay or reimburse
expenses (including attorneys' fees) incurred by you and/or JPMIC
in advance of the final disposition of any such action, suit or
proceeding.
The indemnification and advancement of expenses provided by,
and granted pursuant to, this letter (i) shall be in addition to,
and shall not be deemed exclusive of, any other rights to which
you and/or JPMIC may be entitled under any law, statute,
certificate of incorporation, bylaw, agreement, action of
<PAGE> 84
shareholder or disinterested directors, policies of insurance or
otherwise, both as to action in your official capacity and as to
action in another capacity while holding such office; (ii) shall
continue to be applicable with respect to any action taken or
omitted to be taken by you as a director notwithstanding that you
thereafter cease to be a director; and (iii) shall inure to the
benefit of your heirs, executors and administrators.
To the fullest extent permitted by applicable provisions of
law, you and/or JPMIC shall not be personally liable to the
Corporations or their stockholders for monetary damages for
breach of fiduciary duty as a director.
Very truly yours,
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
---------------------------
Name: E.A. Bourque
---------------------
Title: President
---------------------
SANDIA IMAGING SYSTEMS CORP.
By:/s/ George Peterson
---------------------------
Name: George Peterson
---------------------
Title: President
---------------------
<PAGE> 85
EXHIBIT V
LASERTECHNICS, INC.
5500 Wilshire Avenue, N.E.
Albuquerque, New Mexico 87113
December 14, 1994
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have requested that you provide to us $1,000,000 of
interim financing, to be evidenced by our demand promissory note.
We understand that you will be providing such financing in order
to protect your existing investment in our Company, and in
contemplation of this interim financing being repaid with the
proceeds of long-term financing to be raised by our Company
within the next six months. In order to induce you to provide
such interim financing, we hereby represent and warrant to you,
and agree with you, as follows:
A. Representations and Warranties.
1. We are a "small business concern" within the meaning of
the Small Business Investment Act of 1958, as amended, and the
regulations promulgated thereunder. The information provided by
us on SBA Forms 480, 652 and 1031 delivered in connection
herewith (or prior hereto, as applicable) is true and correct.
2. The proceeds of the interim financing (including any
proceeds from the exercise of warrants) will be used by us to
fund working capital, and for growth, modernization or expansion.
No portion of such proceeds (i) will be used to provide capital
to a corporation licensed under the Small Business Investment
Act, (ii) will be used outside the United States (except (x) to
acquire abroad materials and industrial property rights for a
domestic operation or (y) for transfer to a controlled foreign
subsidiary, so long as at least 51% of our assets and activities
will remain within the United States), or (iii) will be used for
any purpose contrary to the public interest (including but not
limited to activities which are in violation of law) or
inconsistent with free competitive enterprise, in each case,
within the meaning of 13 CFR Section 107.901.
<PAGE> 86
J.P. Morgan Investment Corporation
December 14, 1994
Page 2
3. Our primary business activity does not involve, directly
or indirectly, providing funds to others, the purchase or
discounting of debt obligations, factoring or long-term leasing
of equipment with no provision for maintenance or repair, and we
are not classified under Major Group 65 (Real Estate) of the SIC
Manual.
B. Covenants
Until the interim financing has been repaid in full:
1. We will provide to you and the Small Business
Administration access to our books and records for the purpose of
confirming the use of the proceeds of the financing and for all
other purposes required by the Small Business Administration.
Upon your request at any time or from time to time, we will
provide to you and the Small Business Administration a
certificate of our chief financial officer (i) verifying the use
of such proceeds and (ii) certifying compliance by us with the
provisions of this letter.
2. For a period of one year following the date hereof, we
will not change our business activity if such change would render
us ineligible as a "Small Concern" under the Small Business
Investment Act and the regulations thereunder.
3. We will at all times comply with the non-discrimination
requirements of 13 C.F.R. Parts 112, 113 and 117.
4. Upon your request, we will provide to you an assessment,
in form and substance satisfactory to you, of the economic impact
of your financing, specifying the full-time equivalent jobs
created or retained, the impact of the financing on our business,
in terms of expanded revenue and taxes, and other appropriate
economic benefits, including, but not limited to, technology
development or commercialization, minority business development,
urban or rural business development, expansion of exports and
assistance to manufacturing firms. Upon your request, we will
furnish to you all information requested by you in order for you
to prepare and file SBA Form 468 or to prepare an assessment of
the economic impact of your financing, and any other information
requested or required by any governmental agency asserting
jurisdiction over you.
<PAGE> 87
J.P. Morgan Investment Corporation
December 14, 1994
Page 3
5. We will provide to you such financial statements and
other information as you may from time to time request for the
purpose of assessing our financial condition.
C. SBA Remedies
We acknowledge and agree that upon any breach of the
covenants and agreements set forth in paragraphs A.2. or B.2.
above, you shall be entitled (in addition to all of your other
rights and remedies, including the right to sue for damages) to
require rescission of this Agreement and the related Demand
Promissory Note, and immediate repayment in full of all funds
advanced by you.
D. Miscellaneous
1. This letter shall be binding upon us and our successors
and assigns and shall inure to the benefit of you and your
successors, assigns and transferees.
2. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law).
Very truly yours,
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
-------------------------
Name: E.A. Bourque
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Title: President
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<PAGE> 88
EXHIBIT VI
LASERTECHNICS, INC.
DEMAND PROMISSORY NOTE
New York, New York
$1,000,000 December 14, 1994
LASERTECHNICS, INC., a Delaware corporation having its
principal place of business in Albuquerque, New Mexico (the
"Company"), for value received, hereby promises to pay to the
order of J.P. Morgan Investment Corporation, a Delaware
corporation, or its transferees or assigns (the "Holder"), on
demand, the principal sum of ONE MILLION DOLLARS ($1,000,000),
together with interest thereon from the date hereof at the rate
of twelve percent (12%) per annum (but in no event to exceed the
maximum rate permitted under applicable provisions of law).
Interest shall be calculated on the basis of actual days elapsed
and on a 360-day year, and shall be payable on demand. If any
portion of the principal amount of this Note or any accrued
interest thereon remains outstanding on the first anniversary of
the date hereof, then the entire principal amount of this Note
and all accrued interest thereon shall be and become immediately
due and payable on such date.
The payment of principal and interest shall be made in
such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public
and private debts. Principal and interest on this Note shall be
paid by wire transfer of Federal Funds in accordance with the
written instructions of the Holder or, in the absence of such
instructions, by check mailed to the Holder at 60 Wall Street,
New York, New York 10260.
The Company hereby waives presentment for payment,
demand for payment, notice of nonpayment, protest and notice of
protest.
This Note may be prepaid in whole or in part (in
amounts not less than $100,000) at any time at the option of the
Company, without premium or penalty. If this Note is prepaid on
or before July 13, 1995, then the Company shall grant to the
Holder the right and option to acquire, through July 13, 1995,
the Common Stock or other equity securities into which this Note
would have been convertible pursuant to the following paragraph
if it had not been prepaid, at the price per security specified
in the following paragraph. All payments on this Note shall be
applied first to interest and the remainder thereof to principal.
In the event the Company completes an equity financing
of Five Million Dollars ($5,000,000) or more on or before
June 13, 1995, then the Holder shall have the right, at the
<PAGE> 89
Holder's option, at any time or from time to time on or before
July 13, 1995, to convert the outstanding principal of and
interest on this Note, or such portion thereof as the Holder may
wish, into the Common Stock or other equity securities issued in
such equity financing (or, at the option of the Holder,
equivalent non-voting equity securities), at the price per
security paid by the investors in such equity financing.
This Note shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the
Holder and its successors, assigns and transferees.
The Company hereby promises to pay to the Holder all
costs and expenses of collection and enforcement, including
without limitation reasonable attorneys' fees and expenses.
This Note shall be governed by and construed in
accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law). Any
judicial proceeding brought against the Company to enforce, or
otherwise in connection with, this Note may be brought in any
court of competent jurisdiction in the City of New York, and, by
execution and delivery of this Note, the Company (i) accepts,
generally and unconditionally, the nonexclusive 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 Note 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. THE COMPANY HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT,
COUNTERCLAIM OR CROSS CLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS NOTE.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed by its President and has caused its corporate seal to
be affixed and attested by its Secretary.
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
---------------------------
Name: E.A. Bourque
-------------------
Title: President
-------------------
[Corporate Seal]
Attested:
/s/ Gary B. Tomlin
--------------------------
Name: Gary B. Tomlin
--------------------
Title: Assistant Secretary
--------------------
<PAGE> 90
EXHIBIT VII
NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAWS. NEITHER
THIS WARRANT NOR ANY SUCH SHARES MAY BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR
THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.
Warrant No. 1 For the Purchase of 58,824 Shares
LASERTECHNICS, INC.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, J.P. Morgan
Investment Corporation ("JPMIC") or its successors in interest,
assigns or transferees (collectively, the "Warrant Holder"), is
entitled to subscribe for and purchase from Lasertechnics, Inc.,
a Delaware corporation (the "Company"), 58,824 shares of the
Company's Common Stock (as defined in paragraph 10 hereof) (the
"Warrant Shares") at the "Exercise Price" (as hereinafter
defined) per share, as the number of Warrant Shares and the
Exercise Price shall be adjusted and readjusted or changed from
time to time in accordance with paragraph 4 hereof. The Exercise
Price shall be the lesser of (i) $1.70 and (ii) if the Company
completes an equity financing on or before June 13, 1995, the
price per share at which shares of Common Stock are issued in
such financing or if such financing involves convertible or
exchangeable securities, the price at which such securities may
be converted into or exchanged for Common Stock.
This Warrant may be exercised at any time and from time
to time on or prior to December 13, 1999.
1. Exercise of Warrant.
The rights represented by this Warrant may be exercised
by the Warrant Holder, in whole or in part, by (a) delivering to
the Company a duly executed notice of exercise in the form of
Annex A hereto and (b) at the Warrant Holder's option, either
(i) delivering a check payable to (or wire transfer to the
account of) the Company in an amount equal to the product of (x)
the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised (such product, the "Total
Exercise Price") or (ii) delivering to the Company a letter (the
"Conversion Letter") requesting conversion or exchange of a
portion of any indebtedness owed by the Company to the Warrant
Holder in an amount equal to the Total Exercise Price or
(iii) surrendering to the Company a portion of this Warrant with
<PAGE> 91
a "Value" (as defined below) equal to the Total Exercise Price.
For the purpose of clause (b)(iii) above, "Value" shall mean the
product of (I) the amount by which the average of the closing
prices of the Company's Common Stock on the thirty trading days
preceding the date of exercise, as reported in The Wall Street
Journal, exceeds the Exercise Price and (II) the number of
Warrant Shares as to which this Warrant is surrendered for the
purpose of effecting payment for Warrant Shares. This Warrant
shall be deemed to have been exercised immediately prior to the
close of business on the date of delivery of a duly executed
notice of exercise, together with the amount (in cash or by
delivering the Conversion Letter or by surrender of a portion of
this Warrant) payable upon exercise of this Warrant and, as of
such moment, (i) the rights of the Warrant Holder, as such, with
respect to the number of Warrant Shares as to which this Warrant
is being exercised (and, if applicable, surrendered as payment of
the Total Exercise Price) shall cease, and (ii) such Warrant
Holder shall be deemed to be the record holder of the shares of
Common Stock issuable upon such exercise. As soon as practicable
after the exercise, in whole or in part, of this Warrant, and in
any event within 5 business days thereafter, the Company at its
expense (including the payment by it of any applicable issuance
or stamp taxes) will cause to be issued in the name of and
delivered to the Warrant Holder, or as the Warrant Holder (upon
payment by the Warrant Holder of any applicable transfer taxes)
may direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock to which the
Warrant Holder shall be entitled upon such exercise. In the
event of partial exercise of this Warrant and, if applicable,
partial surrender of this Warrant pursuant to clause (b)(iii) of
this paragraph, the Warrant need not be delivered to the Company
provided that the Warrant Holder agrees to make a notation of
such partial exercise and, if applicable, surrender on the
Warrant. If this Warrant is delivered to the Company, the
Company shall issue and deliver to the Warrant Holder a new
Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be
identical to this Warrant.
2. Investment Representation.
The Warrant Holder by accepting this Warrant represents
that the Warrant Holder is acquiring this Warrant for its own
account or the account of an affiliate for investment purposes
and not with the view to any offering or distribution and that
the Warrant Holder will not sell or otherwise dispose of this
Warrant or the underlying Warrant Shares in violation of
applicable securities laws. The Warrant Holder acknowledges that
the certificates representing any Warrant Shares will bear a
legend indicating that they have not been registered under the
Act, and may not be sold by the Warrant Holder except pursuant to
an effective registration or pursuant to an exemption from
<PAGE> 92
registration. JPMIC shall be entitled to include the Warrant
Shares in any demand or piggyback registration to which JPMIC is
entitled, in respect of Common Stock held by it.
3. Validity of Warrant and Issue of Shares.
The Company represents and warrants that this Warrant
has been duly authorized and validly issued and warrants and
agrees that all shares of Common Stock that may be issued upon
the exercise of the rights represented by this Warrant will, when
issued upon such exercise, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof. The Company further
warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company
will at all times have authorized and reserved a sufficient
number of shares of Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. Antidilution Provisions.
The terms of this Warrant shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a stock dividend
or make a distribution to holders of Common Stock in shares
of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue
by reclassification of its shares of Common Stock any shares
of capital stock of the Company, (A) the Exercise Price
shall be increased or decreased, as the case may be, to an
amount which shall bear the same relation to the Exercise
Price in effect immediately prior to such action as the
total number of shares outstanding immediately prior to such
action shall bear to the total number of shares outstanding
immediately after such action and (B) this Warrant
automatically shall be adjusted so that it shall thereafter
evidence the right to purchase the kind and number of
Warrant Shares or other securities which the Warrant Holder
would have owned and would have been entitled to receive
after such action if this Warrant had been exercised
immediately prior to such action or any record date with
respect thereto. An adjustment made pursuant to this
subparagraph (a) shall become effective retroactively
immediately after the record date in the case of a dividend
or distribution of Common Stock and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) In case the Company shall fix a record date for
the making of a distribution to all holders of Common Stock
<PAGE> 93
(including any such distribution made in connection with a
consolidation or merger in which the Company is the
continuing corporation) of (i) assets (other than cash
dividends or cash distributions payable out of consolidated
net income or retained earnings or dividends payable in
Common Stock), (ii) evidences of indebtedness or other debt
or equity securities of the Company, or of any corporation
other than the Company (except for the Common Stock of the
Company) or (iii) subscription rights, options or warrants
to purchase any of the foregoing assets or securities,
whether or not such rights, options or warrants are
immediately exercisable (hereinafter collectively called
"Distributions on Common Stock"), the Company shall make
provisions for the Warrant Holder to receive upon exercise
of this Warrant, a proportional amount (depending upon the
extent to which this Warrant is exercised) of such assets,
evidences of indebtedness, securities or such other rights,
as if such Warrant Holder had exercised this Warrant on or
before such record date.
(c) In case of any consolidation or merger of the
Company with or into another corporation or the sale of all
or substantially all of the assets of the Company to another
corporation, this Warrant thereafter shall be exercisable
for the kind and amount of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock of the Company deliverable upon
exercise of this Warrant would have been entitled upon such
consolidation, merger or sale; and, in such case,
appropriate adjustment shall be made in the application of
the provisions in this paragraph 4, to the end that the
provisions set forth in this paragraph 4 (including
provisions with respect to changes in and adjustments of the
exercise price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or
other securities or property thereafter deliverable upon the
exercise of this Warrant.
(d) If any event shall occur as to which the
provisions of this paragraph 4 shall not be strictly
applicable, but with respect to which the failure to make
any adjustment to the Exercise Price and the number of
Warrant Shares issuable upon exercise of this Warrant would
not fairly protect the purchase rights represented by this
Warrant in accordance with the intent and principles of this
paragraph 4, upon request of the Warrant Holder, the Company
shall appoint a firm of independent public accountants
reasonably acceptable to the Warrant Holder which shall give
its opinion upon the adjustments, if any, consistent with
the intent and principles established in this paragraph 4
necessary to preserve without dilution the purchase rights
represented by this Warrant. Upon receipt of such opinion,
<PAGE> 94
the Company will promptly mail a copy thereof to the Warrant
Holder and shall make the adjustments described therein.
(e) Upon the occurrence of each adjustment or
readjustment of the exercise price or any change in the
number of Warrant Shares or in the shares of stock or other
securities or property deliverable upon exercise of this
Warrant pursuant to this paragraph 4, the Company at its
expense shall promptly compute such adjustment or
readjustment and change in accordance with the terms hereof
and furnish to each holder hereof a certificate signed by
the chief financial officer of the Company, setting forth
such adjustment or readjustment and change and showing in
detail the facts upon which such adjustment or readjustment
and change is based. The Company shall, upon the written
request at any time of the Warrant Holder, furnish or cause
to be furnished to such Holder, a similar certificate
setting forth (i) such adjustment or readjustment and
change, (ii) the Exercise Price then in effect, and (iii)
the number of Warrant Shares and the amount, if any, of
other shares of stock and other securities and property
which would be received upon the exercise of the Warrant.
(f) The Company shall not be required upon the
exercise of this Warrant to issue any fraction of shares,
but shall make any adjustment therefor by rounding the
number of shares obtainable upon exercise to the next
highest whole number of shares.
5. Notice to Warrant Holder.
If at any time,
(a) the Company shall take any action which would
require an adjustment in the Exercise Price or in the number
of Warrant Shares pursuant to paragraph 4; or
(b) the Company shall authorize the granting to the
holders of its Common Stock of any Distributions on Common
Stock as set forth in paragraph 4(b), and notice thereof
shall be given to holders of Common Stock; or
(c) the Company shall issue any additional shares of
Common Stock or declare any dividend (or any other
distribution) on its Common Stock (other than its regular
quarterly dividends); or
(d) there shall be any capital reorganization or
reclassification of the Common Stock (other than a change in
par value or from par value to no par value or from no par
value to par value of the Common Stock), or any
<PAGE> 95
consolidation or merger to which the Company is a party, or
any sale or transfer of all or substantially all of the
assets of the Company; or
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give
written notice to the Warrant Holder, not less than 20 days
before any record date or other date set for definitive action,
or of the date on which such reorganization, reclassification,
sale, consolidation, merger, dissolution, liquidation or winding
up shall take place, as the case may be. Such notice shall also
set forth such facts as shall indicate the effect of such action
(to the extent such effect may be known at the date of such
notice) on the current Exercise Price and the kind and amount of
the Warrant Shares and other securities and property deliverable
upon exercise of this Warrant. Such notice shall also specify
the date as of which the holders of the Common Stock of record
shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
6. Transfer of Rights.
This Warrant is transferable in whole or in part, at
the option of the Warrant Holder upon delivery of the Warrant
Assignment Form annexed as Annex B hereto, duly executed. The
Company shall execute and deliver a new Warrant or Warrants in
the form of this Warrant with appropriate changes to reflect the
issuance of subsequent Warrants, in the name of the assignee or
assignees named in such instrument of assignment and, if the
Warrant Holder's entire interest is not being transferred or
assigned, in the name of the Warrant Holder, and this Warrant
shall promptly be cancelled. Any transfer or exchange of this
Warrant shall be without charge to the Warrant Holder and any new
Warrant or Warrants issued shall be dated the date hereof. The
term "Warrant" as used herein includes any Warrants into which
this Warrant may be divided or for which it may be exchanged.
7. Lost, Mutilated or Missing Warrant.
Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant,
and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
<PAGE> 96
8. Rights of Warrant Holder.
The Warrant Holder shall not, by virtue hereof, be
entitled to any voting or other rights of a shareholder of the
Company, either at law or equity, and the rights of the Warrant
Holder are limited to those expressed in this Warrant.
9. Successors.
All the provisions of this Warrant by or for the
benefit of the Company or the Warrant Holder shall bind and inure
to the benefit of their respective successors and assigns.
10. Miscellaneous.
(a) As used herein, the term "Common Stock" shall mean
and include the Company's currently authorized common stock, $.01
par value per share (or, at the election of the Warrant Holder,
non-voting common stock, $.01 par value per share) and stock of
any other class or other consideration into which such currently
authorized Common Stock may hereafter have been changed.
(b) This Warrant shall be construed in accordance with
and governed by the laws of the State of New York without regard
to principles of conflicts and choice of laws.
(c) The caption headings used in this Warrant are for
convenience of reference only and shall not be construed in any
way to affect the interpretation of any provisions of this
Warrant.
11. Notices.
Any notice pursuant to this Warrant shall be
sufficiently given if sent by first-class mail, postage prepaid,
or delivered by facsimile transmission, addressed as follows:
If to the Company, then to it at:
Lasertechnics, Inc.
5500 Wilshire Avenue, N.E.
Albuquerque, New Mexico 87113
Attention: Eugene A. Bourque, President
Facsimile No.: (505) 821-2213
(or to such other address as the Company may have furnished
in writing to the Warrant Holder for this purpose);
<PAGE> 97
If to JPMIC, then to it at:
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Attention: C. Seth Cunningham, Managing Director
Facsimile No.: (212) 648-5032
If to any other Warrant Holder, then to it at such address
as such Warrant Holder may have furnished in writing to the
Company for this purpose.
IN WITNESS WHEREOF, the Company, intending to be
legally bound hereby, has caused this Warrant to be signed by its
President, and attested by its Assistant Secretary as of the 14th
day of December, 1994.
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
--------------------------
Name: E.A. Bourque
----------------
Title: President
---------------
Attest:
/s/ Gary B. Tomlin
--------------------------
Name: Gary B. Tomlin
--------------------
Title: Assistant Secretary
--------------------
<PAGE> 98
ANNEX A
COMMON STOCK PURCHASE WARRANT
Notice of Exercise
_______________, 19__
To: LASERTECHNICS, INC.
The undersigned, pursuant to the provisions set forth
in Warrant No. _, hereby irrevocably elects and agrees to
purchase ______ shares of the Company's common stock [or
nonvoting common stock] covered by such Warrant, and makes
payment herewith in full therefor of the Total Exercise Price of
$___________ in the following form:
[specify cash payment or conversion of debt or surrender of
portion of Warrant]
_______________________________________________________________
The undersigned hereby represents that the undersigned is
exercising such Warrant for its own account or the account of an
affiliate for investment purposes and not with the view to any
offering or distribution and that the Warrant Holder will not
sell or otherwise dispose of the underlying Warrant Shares in
violation of applicable securities laws. [When applicable: If
said number of shares is less than all of the shares purchasable
hereunder the undersigned requests that a new Warrant evidencing
the rights to purchase the remaining Warrant Shares (which new
Warrant shall in all other respects be identical to the Warrant
exercised hereby) be registered in the name of ____________ whose
address is
-------------------------
-------------------------
-------------------------]
Signature:
--------------------
Printed Name:
-----------------
Address:
-------------------------
-------------------------
-------------------------
<PAGE> 99
ANNEX B
ASSIGNMENT
FOR VALUE RECEIVED ____________________ hereby sells,
assigns and transfers all of its rights as set forth in Warrant
No. ___ with respect to the shares of the Company's Common Stock
covered thereby as set forth below unto:
Name of Assignee(s) Address(es) No. of Shares
------------------- ---------------- -------------
----------------
All notices to be given by the Company to the Warrant
Holder pursuant to paragraph 5 of Warrant No. ___ shall be sent
to the Assignee(s) at the above listed address(es), and, if the
number of shares being hereby assigned is less than all of the
shares covered by Warrant No. ___, then also to the undersigned.
The undersigned requests that the Company execute and
deliver, if necessary to comply with the provisions of paragraph
6 of Warrant No.___, a new Warrant or, if the number of shares
being hereby assigned is less than all of the shares covered by
Warrant No. ___, new Warrants in the name of the undersigned, the
assignee and/or the assignees, as is appropriate.
Dated: ___________, 19__
Signature:
--------------------
Printed Name:
-----------------
Address:
-------------------------
-------------------------
-------------------------
<PAGE> 100
EXHIBIT VIII
LASERTECHNICS, INC.
5500 Wilshire Avenue, N.E.
Albuquerque, New Mexico 87113
December 29, 1994
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have requested that you provide to us $1,000,000 of
interim financing, to be evidenced by our demand promissory note.
We understand that you will be providing such financing in order
to protect your existing investment in our Company, and in
contemplation of this interim financing being repaid with the
proceeds of long-term financing to be raised by our Company
within the next six months. In order to induce you to provide
such interim financing, we hereby represent and warrant to you,
and agree with you, as follows:
A. Representations and Warranties.
1. We are a "small business concern" within the meaning of
the Small Business Investment Act of 1958, as amended, and the
regulations promulgated thereunder. The information provided by
us on SBA Forms 480, 652 and 1031 delivered in connection
herewith (or prior hereto, as applicable) is true and correct.
2. The proceeds of the interim financing (including any
proceeds from the exercise of warrants) will be used by us to
fund working capital, and for growth, modernization or expansion.
No portion of such proceeds (i) will be used to provide capital
to a corporation licensed under the Small Business Investment
Act, (ii) will be used outside the United States (except (x) to
acquire abroad materials and industrial property rights for a
domestic operation or (y) for transfer to a controlled foreign
subsidiary, so long as at least 51% of our assets and activities
will remain within the United States), or (iii) will be used for
any purpose contrary to the public interest (including but not
limited to activities which are in violation of law) or
inconsistent with free competitive enterprise, in each case,
within the meaning of 13 CFR Section 107.901.
<PAGE> 101
J.P. Morgan Investment Corporation
December 29, 1994
Page 2
3. Our primary business activity does not involve, directly
or indirectly, providing funds to others, the purchase or
discounting of debt obligations, factoring or long-term leasing
of equipment with no provision for maintenance or repair, and we
are not classified under Major Group 65 (Real Estate) of the SIC
Manual.
B. Covenants
Until the interim financing has been repaid in full:
1. We will provide to you and the Small Business
Administration access to our books and records for the purpose of
confirming the use of the proceeds of the financing and for all
other purposes required by the Small Business Administration.
Upon your request at any time or from time to time, we will
provide to you and the Small Business Administration a
certificate of our chief financial officer (i) verifying the use
of such proceeds and (ii) certifying compliance by us with the
provisions of this letter.
2. For a period of one year following the date hereof, we
will not change our business activity if such change would render
us ineligible as a "Small Concern" under the Small Business
Investment Act and the regulations thereunder.
3. We will at all times comply with the non-discrimination
requirements of 13 C.F.R. Parts 112, 113 and 117.
4. Upon your request, we will provide to you an assessment,
in form and substance satisfactory to you, of the economic impact
of your financing, specifying the full-time equivalent jobs
created or retained, the impact of the financing on our business,
in terms of expanded revenue and taxes, and other appropriate
economic benefits, including, but not limited to, technology
development or commercialization, minority business development,
urban or rural business development, expansion of exports and
assistance to manufacturing firms. Upon your request, we will
furnish to you all information requested by you in order for you
to prepare and file SBA Form 468 or to prepare an assessment of
the economic impact of your financing, and any other information
requested or required by any governmental agency asserting
jurisdiction over you.
<PAGE> 102
J.P. Morgan Investment Corporation
December 29, 1994
Page 3
5. We will provide to you such financial statements and
other information as you may from time to time request for the
purpose of assessing our financial condition.
C. SBA Remedies
We acknowledge and agree that upon any breach of the
covenants and agreements set forth in paragraphs A.2. or B.2.
above, you shall be entitled (in addition to all of your other
rights and remedies, including the right to sue for damages) to
require rescission of this Agreement and the related Demand
Promissory Note, and immediate repayment in full of all funds
advanced by you.
D. Miscellaneous
1. This letter shall be binding upon us and our successors
and assigns and shall inure to the benefit of you and your
successors, assigns and transferees.
2. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law).
Very truly yours,
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
----------------------------
Name: E.A. Bourque
-------------------
Title: President
-------------------
<PAGE> 103
EXHIBIT IX
LASERTECHNICS, INC.
DEMAND PROMISSORY NOTE
New York, New York
$1,000,000 December 29, 1994
LASERTECHNICS, INC., a Delaware corporation having its
principal place of business in Albuquerque, New Mexico (the
"Company"), for value received, hereby promises to pay to the
order of J.P. Morgan Investment Corporation, a Delaware
corporation, or its transferees or assigns (the "Holder"), on
demand, the principal sum of ONE MILLION DOLLARS ($1,000,000),
together with interest thereon from the date hereof at the rate
of twelve percent (12%) per annum (but in no event to exceed the
maximum rate permitted under applicable provisions of law).
Interest shall be calculated on the basis of actual days elapsed
and on a 360-day year, and shall be payable on demand. If any
portion of the principal amount of this Note or any accrued
interest thereon remains outstanding on the first anniversary of
the date hereof, then the entire principal amount of this Note
and all accrued interest thereon shall be and become immediately
due and payable on such date.
The payment of principal and interest shall be made in
such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public
and private debts. Principal and interest on this Note shall be
paid by wire transfer of Federal Funds in accordance with the
written instructions of the Holder or, in the absence of such
instructions, by check mailed to the Holder at 60 Wall Street,
New York, New York 10260.
The Company hereby waives presentment for payment,
demand for payment, notice of nonpayment, protest and notice of
protest.
This Note may be prepaid in whole or in part (in
amounts not less than $100,000) at any time at the option of the
Company, without premium or penalty. If this Note is prepaid on
or before July 28, 1995, then the Company shall grant to the
Holder the right and option to acquire, through July 28, 1995,
the Common Stock or other equity securities into which this Note
would have been convertible pursuant to the following paragraph
if it had not been prepaid, at the price per security specified
in the following paragraph. All payments on this Note shall be
applied first to interest and the remainder thereof to principal.
<PAGE> 104
In the event the Company completes an equity financing
of Five Million Dollars ($5,000,000) or more on or before
June 28, 1995, then the Holder shall have the right, at the
Holder's option, at any time or from time to time on or before
July 28, 1995, to convert the outstanding principal of and
interest on this Note, or such portion thereof as the Holder may
wish, into the Common Stock or other equity securities issued in
such equity financing (or, at the option of the Holder,
equivalent non-voting equity securities), at the price per
security paid by the investors in such equity financing.
This Note shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the
Holder and its successors, assigns and transferees.
The Company hereby promises to pay to the Holder all
costs and expenses of collection and enforcement, including
without limitation reasonable attorneys' fees and expenses.
This Note shall be governed by and construed in
accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law). Any
judicial proceeding brought against the Company to enforce, or
otherwise in connection with, this Note may be brought in any
court of competent jurisdiction in the City of New York, and, by
execution and delivery of this Note, the Company (i) accepts,
generally and unconditionally, the nonexclusive 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 Note 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. THE COMPANY HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT,
COUNTERCLAIM OR CROSS CLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS NOTE.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed by its President and has caused its corporate seal to
be affixed and attested by its Secretary.
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
--------------------------
Name: E.A. Bourque
----------------
Title: President
----------------
[Corporate Seal]
Attested:
/s/ Gary B. Tomlin
--------------------------
Name: Gary B. Tomlin
--------------------
Title: Assistant Secretary
--------------------
<PAGE> 105
EXHIBIT X
NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAWS. NEITHER
THIS WARRANT NOR ANY SUCH SHARES MAY BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR
THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.
Warrant No. 2 For the Purchase of 66,225 Shares
LASERTECHNICS, INC.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, J.P. Morgan
Investment Corporation ("JPMIC") or its successors in interest,
assigns or transferees (collectively, the "Warrant Holder"), is
entitled to subscribe for and purchase from Lasertechnics, Inc.,
a Delaware corporation (the "Company"), 66,225 shares of the
Company's Common Stock (as defined in paragraph 10 hereof) (the
"Warrant Shares") at the "Exercise Price" (as hereinafter
defined) per share, as the number of Warrant Shares and the
Exercise Price shall be adjusted and readjusted or changed from
time to time in accordance with paragraph 4 hereof. The Exercise
Price shall be the lesser of (i) $1.51 and (ii) if the Company
completes an equity financing on or before June 28, 1995, the
price per share at which shares of Common Stock are issued in
such financing or if such financing involves convertible or
exchangeable securities, the price at which such securities may
be converted into or exchanged for Common Stock.
This Warrant may be exercised at any time and from time
to time on or prior to December 28, 1999.
1. Exercise of Warrant.
The rights represented by this Warrant may be exercised
by the Warrant Holder, in whole or in part, by (a) delivering to
the Company a duly executed notice of exercise in the form of
Annex A hereto and (b) at the Warrant Holder's option, either
(i) delivering a check payable to (or wire transfer to the
account of) the Company in an amount equal to the product of (x)
the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised (such product, the "Total
Exercise Price") or (ii) delivering to the Company a letter (the
"Conversion Letter") requesting conversion or exchange of a
<PAGE> 106
portion of any indebtedness owed by the Company to the Warrant
Holder in an amount equal to the Total Exercise Price or
(iii) surrendering to the Company a portion of this Warrant with
a "Value" (as defined below) equal to the Total Exercise Price.
For the purpose of clause (b)(iii) above, "Value" shall mean the
product of (I) the amount by which the average of the closing
prices of the Company's Common Stock on the thirty trading days
preceding the date of exercise, as reported in The Wall Street
Journal, exceeds the Exercise Price and (II) the number of
Warrant Shares as to which this Warrant is surrendered for the
purpose of effecting payment for Warrant Shares. This Warrant
shall be deemed to have been exercised immediately prior to the
close of business on the date of delivery of a duly executed
notice of exercise, together with the amount (in cash or by
delivering the Conversion Letter or by surrender of a portion of
this Warrant) payable upon exercise of this Warrant and, as of
such moment, (i) the rights of the Warrant Holder, as such, with
respect to the number of Warrant Shares as to which this Warrant
is being exercised (and, if applicable, surrendered as payment of
the Total Exercise Price) shall cease, and (ii) such Warrant
Holder shall be deemed to be the record holder of the shares of
Common Stock issuable upon such exercise. As soon as practicable
after the exercise, in whole or in part, of this Warrant, and in
any event within 5 business days thereafter, the Company at its
expense (including the payment by it of any applicable issuance
or stamp taxes) will cause to be issued in the name of and
delivered to the Warrant Holder, or as the Warrant Holder (upon
payment by the Warrant Holder of any applicable transfer taxes)
may direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock to which the
Warrant Holder shall be entitled upon such exercise. In the
event of partial exercise of this Warrant and, if applicable,
partial surrender of this Warrant pursuant to clause (b)(iii) of
this paragraph, the Warrant need not be delivered to the Company
provided that the Warrant Holder agrees to make a notation of
such partial exercise and, if applicable, surrender on the
Warrant. If this Warrant is delivered to the Company, the
Company shall issue and deliver to the Warrant Holder a new
Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be
identical to this Warrant.
2. Investment Representation.
The Warrant Holder by accepting this Warrant represents
that the Warrant Holder is acquiring this Warrant for its own
account or the account of an affiliate for investment purposes
and not with the view to any offering or distribution and that
the Warrant Holder will not sell or otherwise dispose of this
Warrant or the underlying Warrant Shares in violation of
applicable securities laws. The Warrant Holder acknowledges that
the certificates representing any Warrant Shares will bear a
<PAGE> 107
legend indicating that they have not been registered under the
Act, and may not be sold by the Warrant Holder except pursuant to
an effective registration or pursuant to an exemption from
registration. JPMIC shall be entitled to include the Warrant
Shares in any demand or piggyback registration to which JPMIC is
entitled, in respect of Common Stock held by it.
3. Validity of Warrant and Issue of Shares.
The Company represents and warrants that this Warrant
has been duly authorized and validly issued and warrants and
agrees that all shares of Common Stock that may be issued upon
the exercise of the rights represented by this Warrant will, when
issued upon such exercise, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof. The Company further
warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company
will at all times have authorized and reserved a sufficient
number of shares of Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. Antidilution Provisions.
The terms of this Warrant shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a stock dividend
or make a distribution to holders of Common Stock in shares
of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue
by reclassification of its shares of Common Stock any shares
of capital stock of the Company, (A) the Exercise Price
shall be increased or decreased, as the case may be, to an
amount which shall bear the same relation to the Exercise
Price in effect immediately prior to such action as the
total number of shares outstanding immediately prior to such
action shall bear to the total number of shares outstanding
immediately after such action and (B) this Warrant
automatically shall be adjusted so that it shall thereafter
evidence the right to purchase the kind and number of
Warrant Shares or other securities which the Warrant Holder
would have owned and would have been entitled to receive
after such action if this Warrant had been exercised
immediately prior to such action or any record date with
respect thereto. An adjustment made pursuant to this
subparagraph (a) shall become effective retroactively
immediately after the record date in the case of a dividend
or distribution of Common Stock and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification.
<PAGE> 108
(b) 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 (i) assets (other than cash
dividends or cash distributions payable out of consolidated
net income or retained earnings or dividends payable in
Common Stock), (ii) evidences of indebtedness or other debt
or equity securities of the Company, or of any corporation
other than the Company (except for the Common Stock of the
Company) or (iii) subscription rights, options or warrants
to purchase any of the foregoing assets or securities,
whether or not such rights, options or warrants are
immediately exercisable (hereinafter collectively called
"Distributions on Common Stock"), the Company shall make
provisions for the Warrant Holder to receive upon exercise
of this Warrant, a proportional amount (depending upon the
extent to which this Warrant is exercised) of such assets,
evidences of indebtedness, securities or such other rights,
as if such Warrant Holder had exercised this Warrant on or
before such record date.
(c) In case of any consolidation or merger of the
Company with or into another corporation or the sale of all
or substantially all of the assets of the Company to another
corporation, this Warrant thereafter shall be exercisable
for the kind and amount of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock of the Company deliverable upon
exercise of this Warrant would have been entitled upon such
consolidation, merger or sale; and, in such case,
appropriate adjustment shall be made in the application of
the provisions in this paragraph 4, to the end that the
provisions set forth in this paragraph 4 (including
provisions with respect to changes in and adjustments of the
exercise price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or
other securities or property thereafter deliverable upon the
exercise of this Warrant.
(d) If any event shall occur as to which the
provisions of this paragraph 4 shall not be strictly
applicable, but with respect to which the failure to make
any adjustment to the Exercise Price and the number of
Warrant Shares issuable upon exercise of this Warrant would
not fairly protect the purchase rights represented by this
Warrant in accordance with the intent and principles of this
paragraph 4, upon request of the Warrant Holder, the Company
shall appoint a firm of independent public accountants
reasonably acceptable to the Warrant Holder which shall give
its opinion upon the adjustments, if any, consistent with
the intent and principles established in this paragraph 4
<PAGE> 109
necessary to preserve without dilution the purchase rights
represented by this Warrant. Upon receipt of such opinion,
the Company will promptly mail a copy thereof to the Warrant
Holder and shall make the adjustments described therein.
(e) Upon the occurrence of each adjustment or
readjustment of the exercise price or any change in the
number of Warrant Shares or in the shares of stock or other
securities or property deliverable upon exercise of this
Warrant pursuant to this paragraph 4, the Company at its
expense shall promptly compute such adjustment or
readjustment and change in accordance with the terms hereof
and furnish to each holder hereof a certificate signed by
the chief financial officer of the Company, setting forth
such adjustment or readjustment and change and showing in
detail the facts upon which such adjustment or readjustment
and change is based. The Company shall, upon the written
request at any time of the Warrant Holder, furnish or cause
to be furnished to such Holder, a similar certificate
setting forth (i) such adjustment or readjustment and
change, (ii) the Exercise Price then in effect, and (iii)
the number of Warrant Shares and the amount, if any, of
other shares of stock and other securities and property
which would be received upon the exercise of the Warrant.
(f) The Company shall not be required upon the
exercise of this Warrant to issue any fraction of shares,
but shall make any adjustment therefor by rounding the
number of shares obtainable upon exercise to the next
highest whole number of shares.
5. Notice to Warrant Holder.
If at any time,
(a) the Company shall take any action which would
require an adjustment in the Exercise Price or in the number
of Warrant Shares pursuant to paragraph 4; or
(b) the Company shall authorize the granting to the
holders of its Common Stock of any Distributions on Common
Stock as set forth in paragraph 4(b), and notice thereof
shall be given to holders of Common Stock; or
(c) the Company shall issue any additional shares of
Common Stock or declare any dividend (or any other
distribution) on its Common Stock (other than its regular
quarterly dividends); or
(d) there shall be any capital reorganization or
reclassification of the Common Stock (other than a change in
<PAGE> 110
par value or from par value to no par value or from no par
value to par value of the Common Stock), or any
consolidation or merger to which the Company is a party, or
any sale or transfer of all or substantially all of the
assets of the Company; or
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give
written notice to the Warrant Holder, not less than 20 days
before any record date or other date set for definitive action,
or of the date on which such reorganization, reclassification,
sale, consolidation, merger, dissolution, liquidation or winding
up shall take place, as the case may be. Such notice shall also
set forth such facts as shall indicate the effect of such action
(to the extent such effect may be known at the date of such
notice) on the current Exercise Price and the kind and amount of
the Warrant Shares and other securities and property deliverable
upon exercise of this Warrant. Such notice shall also specify
the date as of which the holders of the Common Stock of record
shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
6. Transfer of Rights.
This Warrant is transferable in whole or in part, at
the option of the Warrant Holder upon delivery of the Warrant
Assignment Form annexed as Annex B hereto, duly executed. The
Company shall execute and deliver a new Warrant or Warrants in
the form of this Warrant with appropriate changes to reflect the
issuance of subsequent Warrants, in the name of the assignee or
assignees named in such instrument of assignment and, if the
Warrant Holder's entire interest is not being transferred or
assigned, in the name of the Warrant Holder, and this Warrant
shall promptly be cancelled. Any transfer or exchange of this
Warrant shall be without charge to the Warrant Holder and any new
Warrant or Warrants issued shall be dated the date hereof. The
term "Warrant" as used herein includes any Warrants into which
this Warrant may be divided or for which it may be exchanged.
7. Lost, Mutilated or Missing Warrant.
Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant,
and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
<PAGE> 111
8. Rights of Warrant Holder.
The Warrant Holder shall not, by virtue hereof, be
entitled to any voting or other rights of a shareholder of the
Company, either at law or equity, and the rights of the Warrant
Holder are limited to those expressed in this Warrant.
9. Successors.
All the provisions of this Warrant by or for the
benefit of the Company or the Warrant Holder shall bind and inure
to the benefit of their respective successors and assigns.
10. Miscellaneous.
(a) As used herein, the term "Common Stock" shall mean
and include the Company's currently authorized common stock, $.01
par value per share (or, at the election of the Warrant Holder,
non-voting common stock, $.01 par value per share) and stock of
any other class or other consideration into which such currently
authorized Common Stock may hereafter have been changed.
(b) This Warrant shall be construed in accordance with
and governed by the laws of the State of New York without regard
to principles of conflicts and choice of laws.
(c) The caption headings used in this Warrant are for
convenience of reference only and shall not be construed in any
way to affect the interpretation of any provisions of this
Warrant.
11. Notices.
Any notice pursuant to this Warrant shall be
sufficiently given if sent by first-class mail, postage prepaid,
or delivered by facsimile transmission, addressed as follows:
If to the Company, then to it at:
Lasertechnics, Inc.
5500 Wilshire Avenue, N.E.
Albuquerque, New Mexico 87113
Attention: Eugene A. Bourque, President
Facsimile No.: (505) 821-2213
(or to such other address as the Company may have furnished
in writing to the Warrant Holder for this purpose);
<PAGE> 112
If to JPMIC, then to it at:
J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
Attention: C. Seth Cunningham, Managing Director
Facsimile No.: (212) 648-5032
If to any other Warrant Holder, then to it at such address
as such Warrant Holder may have furnished in writing to the
Company for this purpose.
IN WITNESS WHEREOF, the Company, intending to be
legally bound hereby, has caused this Warrant to be signed by its
President, and attested by its Assistant Secretary as of the 29th
day of December, 1994.
LASERTECHNICS, INC.
By:/s/ E.A. Bourque
---------------------------
Name: E.A. Bourque
--------------------
Title: President
-------------------
Attest:
/s/ Gary B. Tomlin
--------------------------
Name: Gary B. Tomlin
--------------------
Title: Assistant Secretary
--------------------
<PAGE> 113
ANNEX A
COMMON STOCK PURCHASE WARRANT
Notice of Exercise
---------------, 19--
To: LASERTECHNICS, INC.
The undersigned, pursuant to the provisions set forth
in Warrant No. -, hereby irrevocably elects and agrees to
purchase ------ shares of the Company's common stock [or
nonvoting common stock] covered by such Warrant, and makes
payment herewith in full therefor of the Total Exercise Price of
$----------- in the following form:
[specify cash payment or conversion of debt or surrender of
portion of Warrant]
_______________________________________________________________
The undersigned hereby represents that the undersigned is
exercising such Warrant for its own account or the account of an
affiliate for investment purposes and not with the view to any
offering or distribution and that the Warrant Holder will not
sell or otherwise dispose of the underlying Warrant Shares in
violation of applicable securities laws. [When applicable: If
said number of shares is less than all of the shares purchasable
hereunder the undersigned requests that a new Warrant evidencing
the rights to purchase the remaining Warrant Shares (which new
Warrant shall in all other respects be identical to the Warrant
exercised hereby) be registered in the name of ____________ whose
address is
-------------------------
-------------------------
-------------------------]
Signature:
--------------------
Printed Name:
-----------------
Address:
-------------------------
-------------------------
-------------------------
<PAGE> 114
ANNEX B
ASSIGNMENT
FOR VALUE RECEIVED ____________________ hereby sells,
assigns and transfers all of its rights as set forth in Warrant
No. ___ with respect to the shares of the Company's Common Stock
covered thereby as set forth below unto:
Name of Assignee(s) Address(es) No. of Shares
------------------- ---------------- -------------
----------------
All notices to be given by the Company to the Warrant
Holder pursuant to paragraph 5 of Warrant No. ___ shall be sent
to the Assignee(s) at the above listed address(es), and, if the
number of shares being hereby assigned is less than all of the
shares covered by Warrant No. ___, then also to the undersigned.
The undersigned requests that the Company execute and
deliver, if necessary to comply with the provisions of paragraph
6 of Warrant No.___, a new Warrant or, if the number of shares
being hereby assigned is less than all of the shares covered by
Warrant No. ___, new Warrants in the name of the undersigned, the
assignee and/or the assignees, as is appropriate.
Dated: ___________, 19__
Signature:
--------------------
Printed Name:
-----------------
Address:
-------------------------
-------------------------
-------------------------
<PAGE> 115
EXHIBIT XI
DEBT TO EQUITY CONVERSION AGREEMENT
This Agreement ("Agreement") is made as of this 10th
day of May, 1995 by and among LASERTECHNICS, INC., a Delaware
Corporation, (the "Company"), and J.P. MORGAN INVESTMENT
CORPORATION, a Delaware Corporation, ("JPMIC") and WOLFENSOHN
ASSOCIATES L.P., a Delaware Limited Partnership ("Wolfensohn").
JPMIC and Wolfensohn may also be hereinafter referred to
collectively as the "Investors" or separately as an "Investor".
RECITALS
A. The Investors presently hold $5.5 million
principal amount of debt of the Company evidenced by the demand
promissory notes listed in Exhibit A attached hereto.
B. The Company's voting Common Stock par value $.01
per share ("Voting Common Stock") is traded publicly on the
NASDAQ market for small capitalization issues ("NASDAQ") which is
very important to both the Company and its stockholders.
C. The Company's net capital as shown by its
financial statements for the fiscal and calendar year ending
December 31, 1994 filed with the Securities and Exchange
Commission ("SEC") is approximately $7500 below the $1 million
level required by NASDAQ for continued listing on its market for
small capitalization issues and the Company expects to incur
operating losses for at least the first second quarters of 1995
<PAGE> 116
which could eliminate and put the Company's net capital in a
negative position by June 30, 1995.
D. The Company strongly desires to restore and
maintain its net capital in excess of $1 million and maintain the
ability to have its Voting Common Stock traded on NASDAQ.
E. The Investors offered to the Company to convert so
much of their debt into equity as the Company reasonably needs to
remedy its existing net capital deficiency and its projected net
capital deficiency through at least June 30, 1995 at a conversion
price of $.95 per share of Voting Common Stock or Non-Voting
Common Stock of the Company, $.01 par value per share (the "Non-
Voting Common Stock").
F. On 1 May 1995 the Board of Directors of the
Company, other than the two directors representing the Investors,
determined that under all the relevant circumstances existing on
such date the conversion price of $.95 per share for existing
debt to Voting Common Stock or Non-Voting Common Stock was fair
to the Company and its stockholders and authorized the conversion
of not less than $2 million and not more than $4 million of the
debt held by the Investors into Voting Common Stock or Non-Voting
Common Stock at a conversion price of $.95 per share.
AGREEMENTS
THEREFORE, the Company and the Investors hereby agree
as follows:
<PAGE> 117
1. Company's Representations and Warranties. As an
inducement to the Investors to enter into this Agreement, the
Company represents and warrants to each of the Investors as
follows:
(a) Any shares of Voting Common Stock
and Non-Voting Common Stock of the Company
issued pursuant to this Agreement will be (i)
duly and validly issued, fully paid and non-
assessable (ii) free of any pledges, liens,
security interests, claims or other
incumbrances of any kind, and (iii) will be
issued in compliance with all applicable
federal and state securities laws. In
addition, the Company has reserved for
issuance the required number of shares of
Voting Common Stock or Non-Voting Common
Stock into which the Non-Voting Common Stock
or Voting Common Stock is convertible; and
(b) All outstanding shares of the
Company's Common Stock (both voting and non-
voting) are duly and validly authorized and
issued, fully paid and nonassessable, and
were issued in compliance with all applicable
federal and state securities laws.
In addition, the Company reaffirms to JPMIC (i) the same
representations and warranties contained in paragraphs 1 and 3 of
Section A of the Company's letter, dated December 29, 1994, to
JPMIC, (ii) the covenant contained in paragraph 2 Section B of
such letter, and (iii) the remedies provided in Section C of such
letter for breach of the covenant in paragraph 2 of Section B,
and agrees that each of the foregoing shall be applicable to the
shares issued pursuant to this Agreement.
2. Conversion of Debt. Immediately following the
execution and delivery of this Agreement, JPMIC shall convert
$2,000,000 of the principal amount of the debt of the Company it
<PAGE> 118
holds, plus accrued interest thereon through May 10, 1995, into
the number of shares of Voting Common Stock and Non-Voting Common
Stock of the Company hereinafter provided at a conversion price
of $.95 per share upon the terms and conditions hereinafter
stated. Wolfensohn shall convert $1,000,000 of the principal
amount of the earliest incurred debt of the Company it holds,
without accrued interest thereon, into the number of shares of
Voting Common Stock of the Company hereinafter provided at a
conversion price of $.95 per share upon the terms and conditions
hereinafter stated. Each Investor shall deliver to the Company
for cancellation the appropriate Demand Promissory Notes
evidencing the debt being converted hereunder. The Company shall
issue to Wolfensohn, if the aggregate principal amount of the
notes it delivers exceed the principal amount of the debt being
converted, a new Demand Promissory Note for the balance of the
principal amount not converted to equity which shall be dated the
date of the note it replaces and contain the same terms and
conditions as the note it replaces. All accrued interest to the
date of conversion on the $1,000,000 of Wolfensohn converted debt
shall remain an outstanding obligation of the Company and be
payable to Wolfensohn upon demand. The accrued interest through
May 10, 1995 on the $2,000,000 of JPMIC converted debt is
$93,000.
3. STOCK RECEIVED UPON CONVERSION. Immediately
following the execution of this Agreement, the Company shall
cause its registrar and transfer agent to issue and deliver to
<PAGE> 119
the Investors the following stock certificates of the Company for
its Voting Common Stock and Non-Voting Common Stock.
To JPMIC: one certificate for 331,000 shares of Voting
Common Stock
To JPMIC: one certificate for 1,872,158 shares of Non-
Voting Common Stock
To Wolfensohn: certificate for 1,052,632 shares of
Voting Common Stock
All shares of stock received by either Investor upon conversion
of the debt provided above shall be "restricted securities" under
the federal securities laws which may not be resold without
registration under the Securities Act of 1933, as amended, or
pursuant to an exemption from the registration requirements of
such Act. Accordingly, each stock certificate evidencing the
common shares received by the Investors upon converting such debt
(the "Common Shares") will bear the following legend:
"These securities have not been
registered under The Securities Act of 1933,
as amended. These securities may not be sold
or offered for sale unless a registration
statement under the Act is in effect with
respect to such sale or in the opinion of
counsel reasonably satisfactory to the
Company, such sale may be made pursuant to
Rule 144 or such registration otherwise is
not required."
Notwithstanding the foregoing, no such registration statement or
opinion of counsel shall be necessary for transfer by either
Investor to an affiliated company if the transferee agrees in
writing to be subject to the terms hereof to the same extent as
if it were the original Investor hereunder.
<PAGE> 120
4. REGISTRATION RIGHTS.
(a) JPMIC. The term "Registrable Securities", as
defined in that certain Shareholders Rights Agreement dated July
8, 1994 (the "Shareholders Rights Agreement"), shall include (in
addition to, and not in limitation of, the other shares currently
included) (i) the shares of Voting Common Stock issued to JPMIC
pursuant to this Agreement and (ii) the shares of Voting Common
Stock issuable (without regard to any restriction on conversion
that may be applicable to any particular holder of such
securities) or issued upon conversion of Non-Voting Common Stock
issued to JPMIC pursuant to this Agreement and the foregoing
shares shall have the registration and other rights and benefits
provided in the Shareholders Rights Agreement. Except as amended
hereby, the Shareholders Rights Agreement remains unchanged and
in full force and effect.
(b) Wolfensohn. Wolfensohn shall have the same
registration rights with regard to any shares of Voting Common
Stock which it receives pursuant to the debt conversion provided
herein as provided for the shares of the Company's common stock
Wolfensohn received pursuant to the Stock Purchase Agreement,
dated 20 January 1994, between the Company and Wolfensohn. The
Company shall have the same expense, indemnification and other
obligations to Wolfensohn with respect to the registration of any
shares of Voting Common Stock described in the preceding sentence
as the Company had in such Stock Purchase Agreement.
<PAGE> 121
5. OTHER DOCUMENTS, ETC. The parties shall execute
and deliver all documents contemplated by this Agreement and
shall cooperate with each other in carrying out its terms and
conditions in accordance with the intentions of the parties
expressed herein.
6. NOTICES. All notices, requests, consents, and
other communications hereunder shall be in writing and shall be
deemed to have been made when delivered, mailed first-class
postage prepaid or delivered by facsimile transmission,
(a) if to Investors, at the address and
fax numbers as set forth on the signature
page hereof, or at such other address and fax
numbers as may have been furnished to the
Company by Investors in writing, or
(b) if to the Company, 5500 Wilshire
Avenue, N.E., Albuquerque, New Mexico 87113,
(fax number 505-821-2213) or at such other
address or fax number as may have been
furnished to Investors in writing by the
Company.
7. ENTIRE AGREEMENT. This Agreement embodies the
entire agreement and understanding between Investors and the
Company relating to the subject matter hereof and supersedes all
prior agreements and understandings relating to the subject
matter hereof.
8. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Agreement contained by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto.
9. HEADINGS. The headings of the articles and
sections of this Agreement have been inserted for convenience of
<PAGE> 122
reference only and shall in no way restrict or otherwise modify
any of the terms or provisions hereof.
10. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with an governed by the law of the
State of New York without giving effect to the conflict of laws.
11. FACSIMILE DOCUMENTS. Facsimile documents that are
transmitted by telecommunications and reproduced by electronic
means, with electronically reproduced signatures, shall be
legally effective and binding until such time as replaced by
documents containing the original signatures, which shall be
provided within a reasonable time.
12. COUNTERPARTS. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
J.P. MORGAN INVESTMENT CORPORATION LASERTECHNICS, INC.
By:/s/ C. Seth Cunningham By:/s/ Eugene A. Bourgue
------------------------ --------------------------
Managing Director Eugene A. Bourque,
60 Wall Street President
New York, New York 10260-0060
Fax No. 212-648-5032
WOLFENSOHN ASSOCIATES, L.P.
By:/s/Richard C. E. Morgan
-------------------------
General Partner
40th Floor
599 Lexington Avenue
New York, New York 10022
Fax No. 203-968-0371
<PAGE> 123
EXHIBIT A
SCHEDULE OF LASERTECHNICS, INC. DEBT TO JPMIC AND WOLFENSOHN
<TABLE>
<CAPTION>
DATE INCURRED PAYEE INTEREST RATE PRINCIPAL AMOUNT
------------- ----- ------------- ----------------
<S> <C> <C> <C>
14 Dec. 1994 JPMIC 12% $1,000,000
29 Dec. 1994 JPMIC 12% 1,000,000
15 Feb. 1995 Wolfensohn 12% 500,000
22 Feb. 1995 Wolfensohn 12% 500,000
1 March 1995 Wolfensohn 12% 500,000
16 March 1995 Wolfensohn 12% 500,000
29 March 1995 Wolfensohn 12% 500,000
12 April 1995 Wolfensohn 12% 250,000
19 April 1995 Wolfensohn 12% 300,000
28 April 1995 Wolfensohn 12% 150,000
4 May 1995 Wolfensohn 12% 300,000
---------
</TABLE>
10 May 1995 Total Principal Amount of Debt $5,500,000
