EXHIBIT 1
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LASERMASTER TECHNOLOGIES, INC.
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COMMON STOCK PURCHASE AGREEMENT
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Dated September 25, 1996
Shares
of
Common Stock
($.01 Par Value)
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LASERMASTER TECHNOLOGIES, INC.
COMMON STOCK PURCHASE AGREEMENT
AGREEMENT, made and entered into as of the 25th day of September, 1996,
between LaserMaster Technologies, Inc., a Minnesota corporation (the "Company")
and General Electric Capital Corporation (the "Investor").
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investor agree as follows:
1. AUTHORIZATION OF ISSUE OF SHARES. The Company has authorized (i) the
issue and sale of up to 538,720 shares of its Common Stock, $.01 par value per
share (the "Common Stock") and (ii) the issuance of Warrants to purchase up to
541,406 shares of its Common Stock to the Investor.
2. SALE AND PURCHASE PRICE.
(a) Effective on the date hereof, and subject to the terms and
conditions herein set forth, Investor shall purchase from the Company
410,256 shares (the "Shares") of Common Stock at a price of $4.875 per
share for an aggregate purchase price of $1,999,998. Simultaneous with the
purchase of the Shares, the Company shall issue to the Investor a Warrant
in the form of the attached Exhibit A (the "Warrants") dated as of the date
hereof, and without any additional consideration, to purchase 471,285
shares of Common Stock at an exercise price (subject to adjustment) of
$6.79 per share.
(b) Simultaneous with execution of this Agreement (i) Investor shall
purchase the Shares by delivering its promissory note in the form of the
attached Exhibit B for $1,999,998 ("Promissory Note"), and (ii) the Company
shall issue and deliver the Shares and Warrants to the Investor.
3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
represents and warrants to the Investor that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota, and has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business in all material respects as it is now being conducted and
as it currently proposes to conduct it in the future. The Company has the
requisite corporate power and authority to issue the Shares, the Warrants and
the Warrant Shares and to otherwise perform its obligations under this
Agreement.
(b) The copies of the Articles of Incorporation, as amended (the
"Articles of Incorporation") and bylaws of the Company which have been delivered
to legal counsel for Investor prior to the execution of this Agreement are true
and complete copies of the duly and legally adopted Articles of Incorporation
and Bylaws of the Company in effect as of the date of this Agreement.
(c) The Company is duly qualified, licensed or domesticated as a
foreign corporation in good standing in each jurisdiction wherein the nature of
its activities or the properties owned or leased by it makes such qualification,
licensing or domestication necessary and in which failure to so qualify or be
licensed or domesticated would have a material adverse impact upon its business.
(d) The Company has delivered to Investor copies of (i) its Form 10-K
for the Year Ended June 30, 1995, which includes its audited statements of
operations, cash flows, and changes in stockholders' equity for the three years
ended June 30, 1995 and its balance sheets as of June 30, 1995 and 1994, (ii)
its quarterly reports on Form 10-Q for the quarters ended September 30, 1995,
December 31, 1995 and March 31, 1996, which contain its unaudited statements of
operations for the quarterly and year to date periods then ended and for the
prior year periods, unaudited statements of cash flow for the year to date and
prior year
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comparative periods, and balance sheets as of quarter end, (iii) its 1995 annual
report to shareholders, (iv) its proxy statement for its annual meeting held May
23, 1996, and (v) Company's audited financial statements for the year ended June
30, 1996.
(e) The Shares, when issued and paid for pursuant to the terms of
this Agreement, will be duly authorized, validly issued and outstanding, fully
paid, nonassessable shares and shall be free and clear of all pledges, liens,
encumbrances and restrictions, except for restrictions on transfer under
applicable securities laws. The Warrants are duly authorized, and when issued
pursuant to the terms of this Agreement will be validly granted and outstanding,
fully paid and free and clear of all pledges, liens, and encumbrances and
restrictions, except for restrictions on transfer under applicable securities
laws. The Warrant Shares have been duly authorized and reserved for issuance
and, when issued upon exercise of the Warrant, will be duly authorized, validly
issued and outstanding, fully paid, nonassessable and free and clear of all
pledges, liens, encumbrances and restrictions, except for restrictions on
transfer under applicable securities laws.
(f) The authorized capital stock of the Company consists of
35,000,000 shares, 30,000,000 of which are shares of Common Stock, $.01 par
value, and 5,000,000 of which are shares of preferred stock, undesignated as to
terms and preferences. As of September 1, 1996, 11,458,634 shares of Common
Stock were outstanding, 292,951 shares of Common Stock were reserved for
issuance upon the exercise of outstanding warrants and 3,739,379 shares of
Common Stock were reserved for issuance pursuant to the Stock Option Plans. No
shares of Preferred Stock are outstanding. Neither the offer nor the issuance or
sale of the Shares or the Warrants constitutes an event, under any anti-dilution
provisions of any securities issued or issuable by the Company or any agreements
with respect to the issuance of securities by the Company, which will either
increase the number of shares issuable pursuant to such provisions or decrease
the consideration per share to be received by the Company pursuant to such
provisions.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action of the Company,
and no other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. This Agreement has been
duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of the Company, or require any authorization,
consent, approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Articles of Incorporation or
Bylaws of the Company or any indenture, mortgage, lease, loan agreement or other
agreement or instrument by which the Company is bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which the Company is
subject.
(i) The Company is not required to submit any notice, report or other
filing with any governmental authority in connection with the execution or
delivery by it of this Agreement or, except as contemplated herein, the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by the Company in connection with its
execution, delivery and performance of this Agreement or the transactions
contemplated hereby.
(j) No person, firm or corporation has or will have, as a result of
any act or omission by the Company, any right, interest or valid claim against
any Investor or the Company for any commission, fee or other compensation as a
finder or broker, or in any similar capacity, in connection with the
transactions
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contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES BY THE INVESTOR. The Investor
represents and warrants to the Company that:
(a) It is purchasing the Shares for investment for its own account
and not with the view to, or for resale in connection with, any distribution of
the Shares in violation of any applicable securities law. The Investor
understands that the Shares have not been registered under the Securities Act or
any state securities laws by reason of their contemplated issuance in
transactions exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) thereof and that the reliance of
the Company and others upon this exemption is predicated in part upon this
representation by the Investor. The Investor further understands that the Shares
may not be transferred or resold without (i) registration under the Securities
Act and any applicable state securities laws, or (ii) an exemption from the
requirements of the Securities Act and applicable state securities laws.
(b) The Investor is an "accredited investor" for purposes of
Regulation D promulgated under the Securities Act and, either alone or with such
Investor's representative, has such knowledge and experience in financial and
business matters that such Investor is capable of evaluating the merits and
risks of the investment in the Shares and Warrants and bear the economic
consequences thereof. The Investor has relied upon such Investors' own
independent investigation and, to the extent believed appropriate, the
Investor's own professional, tax and other advisors, and has not relied upon any
representation or warranty from the Company, or any of their respective
officers, directors, employees agents, affiliates or representatives, with
respect to the value of the Shares. The Investor has evaluated the merits and
risks of an investment in the Shares and has determined that such shares are a
suitable investment for the Investor in light of such Investor's overall
financial condition and prospects. The Investor has been advised, and is aware,
that the market prices of shares of stock of publicly traded companies fluctuate
and that there can be no assurance as to the future performance of any given
securities, including the Shares. The Investor has been furnished with all
publicly available information about the Company's assets, operations, and
business activities which the Investor has requested and which the Investor
considers necessary or relevant to enable the Investor to make a prudent
decision about the purchase of the Shares and Warrants.
(c) The execution, delivery and performance of this Agreement by the
Investor and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action of the Investor,
and no other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. This Agreement has been
duly executed and delivered by the Investor and constitutes the valid and
binding obligation of such Investor, enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
(d) The execution, delivery and performance of this Agreement by the
Investor and the consummation by such Investor of the transactions contemplated
hereby do not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of either Investor, or require any authorization,
consent, approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Articles of Incorporation or
Bylaws of such Investor or any indenture, mortgage, lease, loan agreement or
other agreement or instrument by which such Investor is bound or affected, or
any law, statute, rule or regulation or order, judgment or decree to which such
Investor is subject.
(e) The Investor is not required to submit any notice (other than
reports under Section 16(a) or 13D of the Securities Act of 1934), report or
other filing with any governmental authority in connection with the execution or
delivery by it of this Agreement or the consummation of the transactions
contemplated hereby. No consent, approval or authorization of any governmental
or regulatory authority or any other
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party or person is required to be obtained by the Investor in connection with
its execution, delivery and performance of this Agreement or the transactions
contemplated hereby.
(f) No person, firm or corporation has or will have, as a result of
any act or omission by the Investor, any right, interest or valid claim against
the Company for any commission, fee or other compensation as a finder or broker,
or in any similar capacity, in connection with the transactions contemplated by
this Agreement.
5. COVENANTS OF THE COMPANY. So long as the Warrants shall remain
outstanding and are not fully exercised, the Company covenants and agrees as
follows:
(a) The Company will maintain its corporate existence in good
standing and comply with all applicable laws and regulations of the United
States or of any state or political subdivision thereof and of any government
authority where failure to so comply would have a material adverse impact on the
Company or its business or operations.
(b) The Company will keep books of record and account in which full,
true and correct entries are made of all of its dealings, business and affairs,
in accordance with GAAP consistently applied. The Company will employ certified
public accountants of recognized national standing selected by the Board of
Directors of the Company who are "independent" within the meaning of the
accounting regulations of the Commission. The Company will have annual audits
made by such independent public accountants in the course of which such
accountants shall make such examinations, in accordance with generally accepted
auditing standards, as will enable them to give such reports or opinions with
respect to the financial statements of the Company as will satisfy the
requirements of the Commission in effect at such time with respect to reports or
opinions of accountants (except with regard to the Commission's requirements for
accounting for preferred shares as debt rather than equity).
(c) The Company will deliver to the Investor promptly upon
transmission thereof, copies of all reports, notices, financial statements,
proxy statements, registration statements and notifications filed by it with the
Commission pursuant to any act administered by the Commission or furnished to
shareholders of the Company or to any national securities exchange, except
reports on Form D filed pursuant to Rule 503 under the Securities Act and
registration statements relating to employee benefit plans.
(d) The Company shall use its best efforts to cause its shares to
continue to be quoted on the Nasdaq National Market, or listed on a national
securities exchange.
(e) The Company will not repay, or allow its subsidiary LaserMaster
Corporation to repay, the indebtedness represented by that certain Promissory
Note to TimeMasters, Inc., a Minnesota corporation ("TimeMasters") dated January
17, 1996 (the "January Note") in original principal amount of $1,765,000 until
payment in full of that certain promissory note from TimeMasters to the Company
dated September 15, 1996 in $1,800,000 original principal amount (the
"TimeMasters Note") and that certain promissory note dated September 15, 1996
from Grandchildren's Realty Alternative Management Program I Limited Partnership
and Grandchildren's Realty Alternative Management Program I #2 Limited
Partnership, Minnesota limited partnerships for which TimeMasters serves as
general partner (together, "GRAMPI") to Company in original principal amount of
$2,200,000 (the "Mortgage Note" and together with the TimeMasters Note, the
"TimeMasters Promissory Notes"), except that the Company may, with the agreement
of or at the direction of TimeMasters, offset the obligation under the January
Note against the TimeMasters Note. Investor shall be deemed to be a third party
beneficiary of this subsection (e).
(f) The Company will, upon the occurrence of an event of default under
the Mortgage Note or that certain Mortgage and Security Agreement and Fixture
Financing Agreement dated September 15, 1996 securing the Mortgage Note (the
"Mortgage"), diligently exercise its remedies under the Mortgage in a
commercially reasonable manner, including, in the event the mortgagor is not
actively proceeding with the sale of the property subject to the Mortgage,
commencing foreclosure thereof, and will, in any event, commence foreclosure
proceedings within 60 days after any notice of such event of default unless
Investor, together with Sihl-Zurich Paper Mill on Sihl AG , a Swiss corporation
("Sihl"), otherwise agree in writing that such remedy shall be further delayed.
The Company acknowledges that the agreement of Investor
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hereunder, and the timing of the second installment of the Promissory Note, is
conditional on the payment of the TimeMasters Promissory Notes.
6. REGISTRATION.
(a) Definitions. As used in this Section 6, the following terms have
the following meanings:
(i) "Forms ▇-▇, ▇▇-▇, ▇-▇, ▇▇-▇ and S-3" shall mean the forms
so designated, promulgated by the Commission for registration of securities
under the Securities Act, and any forms succeeding to the functions of such
forms, whether or not bearing the same designation.
(ii) "Holder" shall mean Investor and any holder of Registrable
Stock to whom the registration rights granted hereunder have been
transferred in accordance with Section 6(j), provided that anyone who
acquires any Registrable Stock in a distribution pursuant to a registration
statement filed by the Company under the Securities Act shall not thereby
be deemed to be a "Holder."
(iii) "Register", "registered" and "registration" shall refer to
a registration effected by filing a registration statement in compliance
with the Securities Act and the declaration or ordering by the Commission
of effectiveness of such registration statement.
(iv) "Registrable Stock" shall mean the Shares, all shares of
Common Stock issued or issuable upon exercise of the Warrants, and in each
case held by a Holder, all shares of Common Stock issued by the Company in
respect of such shares.
(v) "Registration Rights Period" shall mean the period of time
commencing on the date of this Agreement and ending on the latter to occur
of (A) two years after the earlier to occur of the full exercise, or the
termination, of the Warrants, or (B) in the event that the Warrants are
exercised within the first six years of their term after a notice of, but
prior to a record date for, a dividend pursuant to section 3(f) of such
Warrants, four years after such exercise.
(b) Required Registration.
(i) If at any time during the Registration Rights Period a
Holder proposes to dispose of the then Registrable Stock (the "Initiating
Holders"), and such disposition may not, in the opinion of such Initiating
Holders, be effected in the public marketplace (as opposed to a private
transaction under the Securities Act) at equally favorable net terms to the
Initiating Holders without registration of such shares under the Securities
Act, the Initiating Holders may request the Company in writing to effect
such registration, stating the number of shares of Registrable Stock to be
disposed of by such Initiating Holders and the intended method of
disposition. Upon receipt of such request, the Company will give prompt
written notice thereof to all other Holders, whereupon such other Holders
shall give written notice to the Company within 20 days after the date of
the Company's notice (the "Notice Period") if they propose to dispose of
any shares of Registrable Stock pursuant to such registration, stating the
number of shares of Registrable Stock to be disposed of by such Holder(s)
and the intended method of disposition.
(ii) The Company will use its best efforts to effect promptly
after the Notice Period the registration under the Securities Act of all
shares of Registrable Stock specified in the requests of the Initiating
Holders, and the requests of the other Holders, subject, however, to the
limitations set forth in Section 6(d).
(c) Registration Procedures. Whenever the Company is required by the
provisions of Section 6(b) to use its best efforts to effect promptly the
registration of shares of Registrable Stock, the Company will:
(i) prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to cause
such registration statement to become and remain
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effective as provided herein;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of the
Securities Act with respect to the disposition of all shares covered by
such registration statement, including such amendments and supplements as
may be necessary to reflect the intended method of disposition from time to
time of the prospective seller or sellers of such shares, but for no longer
than ninety (90) days subsequent to the effective date of such
registration in the case of a registration statement on Form ▇-▇, ▇▇-▇, ▇▇-
2 or S-2 and for no longer than one hundred fifty (150) days in the case of
a registration statement on Form S-3;
(iii) furnish to each prospective seller such number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the public sale or
other disposition of the shares owned by such seller;
(iv) use its best efforts to register or qualify the shares
covered by such registration statement under such other securities or blue
sky or other applicable laws of such jurisdictions within the United States
as each prospective seller shall reasonably request, to enable such seller
to consummate the public sale or other disposition in such jurisdictions of
the shares owned by such seller; provided, however, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction
where it is not at the time so qualified; and
(v) if such registration includes an underwritten public
offering, cooperate with the Holders in the preparation and execution of an
underwriting agreement containing customary representations and warranties
on the part of the Company and furnish at the closing provided for in the
underwriting agreement: (i) opinions, dated such respective dates, of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, covering such matters as such underwriters
and holder or holders may reasonably request; and (ii) letters, dated such
respective dates, from the independent certified public accountants of the
Company, addressed to the underwriters, covering such matters as such
underwriters and holder or holders may reasonably request.
(d) Limitations on Required Registrations.
(i) Investor (considered together with any Holder that acquires
Registrable Stock therefrom and registration rights pursuant to Section
6(j)) shall have the right to require the Company to effect no more than
five registrations pursuant to Section 6(j)).
(ii) The Company shall not be required to effect a registration
pursuant to Section 6(b) more frequently than once every six months.
(iii) Whenever a requested registration is for an underwritten
offering, only shares which are to be included in the underwriting may be
included in the registration. Notwithstanding the provisions of Sections
6(b), if the underwriter determines that (A) marketing factors require a
limitation of the total number of shares to be underwritten, or (B) the
offering price per share would be reduced by the inclusion of the shares of
the Company, then the number of shares to be included in the registration
and underwriting shall first be allocated among all Holders who indicated
to the Company their decision to distribute any of their Registrable Stock
through such underwriting, in proportion, as nearly as practicable, to the
respective numbers of shares of Registrable Stock owned by such Holders at
the time of filing the registration statement, and the remainder, if any,
to the Company. No stock excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
If the Company disapproves of any such underwriting, the Company may elect
to withdraw therefrom by written notice to the Initiating Holders and the
underwriter. The securities so withdrawn from such underwriting shall also
be withdrawn from such registration.
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(iv) If at the time of any request to register Registrable Stock
pursuant to Section 6(b), the Company is engaged, or has fixed plans to
engage within 90 days of the time of the request, in a registered public
offering as to which the Holders may include such Stock pursuant to Section
6(e) or is engaged in any other activity which, in the good faith
determination of the Company's Board of Directors, would be adversely
affected by the requested registration to the material detriment of the
Company, then the Company may at its option direct that such request be
delayed for a period not in excess of 90 days from the effective date of
such offering, or the date of commencement of such other material activity,
as the case may be, such right to delay a request to be exercised by the
Company not more than once with respect to any request for registration.
(e) Incidental Registration. If at any time during the Registration
Rights Period the Company proposes to register any of its securities under the
Securities Act (other than a registration effected solely to implement an
employee benefit plan or a transaction to which Rule 145 of the Commission is
applicable), it will at each such time give written notice to all Holders of its
intention so to do. Upon the written request of a Holder or Holders (stating
the number of shares of Registrable Stock to be disposed of by such Holder or
Holders and the intended method of disposition) given within 30 days after
receipt of any such notice, the Company will use its best efforts to cause all
such shares of Registrable Stock intended to be disposed of, the Holders of
which shall have requested registration thereof, to be included in such
registration, subject, however, to the following limitations:
(i) If any registration pursuant to Section 6(e) shall be
underwritten in whole or in part, the Company may require that the
Registrable Stock requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters.
(ii) If in the good faith judgment of the managing underwriter
of such public offering the inclusion of all of the Registrable Stock
requested for inclusion pursuant to Section 6(e), together with all
additional shares of all other shareholders that have requested inclusion
of their shares pursuant to incidental registration rights granted by the
Company prior to the date hereof (the Registrable Stock and all of the
other shares requested for inclusion, other than shares of Common Stock
issued or issuable upon conversion of that certain Promissory Note dated
January 17, 1996 between TimeMasters and the Company or pursuant to
exercise of that certain Stock Purchase Warrant dated January 17, 1996
between TimeMasters and the Company, being herein together referred to as
the "Selling Shareholders' Shares") would reduce the number of shares to be
offered by the Company or interfere with the successful marketing of the
shares of stock offered by the Company, the number of Selling Shareholders'
Shares otherwise to be included in the underwritten public offering may be
reduced pro rata among all holders of Selling Shareholders' Shares (based
upon the number of shares requested to be included by each such holder) .
(iii) If, in connection with a registration initiated at the
request of any security holder of the Company pursuant to a demand
registration right granted to such security holder (the "Requesting
Security Holder"), the Selling Shareholders' Shares would reduce the number
of shares to be offered by the Requesting Shareholder or interfere with the
successful marketing of the shares of stock offered by the Requesting
Shareholder, the number of Selling Shareholders' Shares otherwise to be
included in the underwritten public offering may be reduced pro rata among
the holders thereof requesting such registration (based upon the number of
shares requested to be included by each such holder).
(iv) Those Selling Shareholders' Shares which are excluded from
the underwritten public offering pursuant to this Section 6(e) shall be
withheld from the market by the holders thereof for a period, not to exceed
90 days, which the managing underwriter reasonably determines is necessary
in order to effect the underwritten public offering.
(f) Rule 144. The registration rights granted under Section 6 shall
terminate as to any Holder or permissible transferees or assignees of such
rights if such person would be permitted to sell all of
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the Registrable Stock held by him or it within one three-month period pursuant
to Rule 144.
(g) Cooperation by Prospective Sellers.
(i) Each prospective seller of Registrable Stock, and each
underwriter designated by each such seller, will furnish to the Company
such information as the Company may reasonably require from such seller or
underwriter in connection with the registration statement (and the
prospectus included therein).
(ii) The Holders holding shares included in the registration
statement will suspend (until further notice) further sales of such shares
after receipt of telegraphic or written notice from the Company to suspend
sales to permit the Company to correct or update a registration statement
or prospectus or, if the Company reasonably determines that correcting or
updating the registration statement or prospectus would require disclosure
of material information which the Company has a bona fide business purpose
for preserving as confidential, during the time that such suspension is
necessary so that the registration statement and prospectus will meet the
requirements of the Securities Act. At the end of the period during which
the Company is obligated to keep the registration statement current and
effective as described in Section 6(b)(i)(and any extensions thereof
required by the preceding sentence), the Holders holding shares included in
the registration statement shall discontinue sales of shares pursuant to
such registration statement upon receipt of notice from the Company of its
intention to remove from registration the shares covered by such
registration statement which remain unsold, and such Holders shall (after
written request for such notice, describing the information required in the
response) notify the Company of the number of shares registered which
remain unsold promptly upon receipt of such notice from the Company.
(h) Expenses of Registration. All expenses incurred in effecting any
registration pursuant to this Section 6, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company and expenses of any audits incidental to or required by
any such registration, shall be borne by the Company, except (a) that all
underwriting discounts and commissions shall be borne by the Holders holding the
securities registered pursuant to such registration, pro-rata according to the
quantity of their securities so registered; and (b) the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 6(b) if the registration request is subsequently withdrawn at the
request of the Initiating Holder, and not at the request of the Company or
because of any other action by the Company, unless the Initiating Holder agrees
to forfeit its right to one demand registration pursuant to Section 6(b) (in
which case the Company shall bear such expenses).
(i) Indemnification.
(i) To the extent permitted by law, the Company will indemnify
each Holder requesting or joining in a registration, each agent, officer
and director of such Holder, each person controlling such Holder, and each
underwriter and selling broker of the securities so registered
(collectively, "Representatives" and collectively with each such Holder,
agent, officer, director or person, "Indemnitees") against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance (or in
any related registration statement, notification or the like) or any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made, or
any violation by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Indemnitee for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, provided, however, that (A) the Company will not be liable to any
Indemnitee in any such case to the extent that any such claim, loss, damage
or liability is caused by any untrue statement or omission so made in
strict conformity with written information furnished to the Company by an
instrument duly executed by
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such Indemnitee and stated to be specifically for use therein; (B) the
foregoing indemnity agreement is subject to the condition that, insofar as
it relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in
the amended prospectus filed with the Commission pursuant to Rule 424(b)
(the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any Representative, if a copy of the Final Prospectus was not
furnished to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the
Securities Act; (C) this indemnity shall not be deemed to relieve any
underwriter of any of its due diligence obligations; (D) the indemnity
agreement contained in this subsection 6(i) shall not apply to amounts paid
in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld; and (E) the foregoing shall not relieve
the Company from liability for indemnity to an officer or director that
furnishes information to the Company in his capacity as an officer or
director.
(ii) To the extent permitted by law, each Holder requesting or
joining in a registration and each underwriter of the securities so
registered will indemnify the Company and its officers and directors and
each person, if any, who controls any thereof within the meaning of Section
15 of the Securities Act and their respective successors against all
claims, losses, damages and liabilities or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances in which they were
made; and will reimburse the Company and each other person indemnified
pursuant to this paragraph (ii) for all legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided, however, that (A) this
paragraph (ii) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon and in strict conformity
with written information (including, without limitation, written negative
responses to inquiries) furnished to the Company by an instrument duly
executed by such Holder or underwriter and stated to be specifically for
use in such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto; (B) the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement (or
alleged untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended prospectus
on file with the Commission at the time the registration statement becomes
effective or in the Final Prospectus, such indemnity agreement shall not
inure to the benefit of any Representative, if a copy of the Final
Prospectus was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act; (C) this indemnity shall not be deemed to
relieve any underwriter of any of its due diligence obligations; (D) the
indemnity agreement contained in this subsection 6(i)(ii) shall not apply
to amounts paid in settlement of any such claim, loss, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; (E) the obligations of
such Holders shall be limited to an amount equal to the proceeds to each
such Holder of the Registrable Stock sold as contemplated herein, unless
such claim, loss, damage, liability or action resulted from such Holder's
fraudulent misconduct; and (F) the foregoing shall not create any right to
indemnity from an officer or director that furnishes information to the
Company in his capacity as an officer or director.
(iii) Each party entitled to indemnification hereunder (the
"indemnified party") shall give notice to the party required to provide
indemnification (the "indemnifying party") promptly after such indemnified
party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the indemnifying party (at its expense) to assume
the defense of any claim or any litigation resulting therefrom, provided
that counsel for the indemnifying party, who shall conduct the defense of
such claim or litigation, shall be satisfactory to the indemnified party,
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and the indemnified party may participate in such defense at such party's
expense, and provided, further, the omission by any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 6(i), except to the extent that the
omission results in a failure of actual notice to the indemnifying party
and such indemnifying party is damaged solely as a result of the failure to
give notice. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(iv) The Company agrees that the failure of the Company or any
Holder of Registrable Stock to negotiate an underwriting agreement that
excludes from the Company's obligation to indemnify Representatives the
matters set forth in section 6(i)(i)(A) or (B) shall not relieve the
Company of its obligation to proceed with such registration on the terms
proposed by such Representative.
(j) Transfer of Registration Rights. One or more of the five demand
registration rights granted to the Investor under Section 6(b) may be
transferred but only to a transferee who shall acquire not less than 100,000
shares of Registrable Stock (as adjusted for Recapitalization Events) and the
registration rights under Section 6(e) may not be transferred separate from the
registration rights under section 6(b). Any request for transfer of the
Registrable Stock to which a transfer of registration rights pursuant to this
Section 6(j) is intended to apply shall be accompanied by notice to the Company
of the number of demand registration rights which the transferring party intends
that the transferee acquire. Notwithstanding any provision of this Section 6,
the registration rights granted to the Holders under this Section 6 may not be
assigned to any person or entity which, in the Company's reasonable judgment, is
a competitor of the Company.
(k) Delay of Registration. The Holders shall have no right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 6.
7. RESTRICTION ON TRANSFER OF SHARES.
(a) Restrictions. The Shares, the Warrant and the Warrant Shares are
only transferable pursuant to (a) an offering registered under the Securities
Act, (b) Rule 144 or Rule 144A or other exemption under the Securities Act (or
any similar rule then in effect) if such rules are or become available, or (c)
and, with respect to the Warrant, the terms of the Warrant, any other legally
available means of transfer.
(b) Legend. Each certificate representing Shares or Warrant Shares
shall be endorsed with the following legends:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel reasonably satisfactory to this
corporation that such transfer may lawfully be made without
registration under the Securities Act of 1933, as amended, and all
applicable state securities laws or (ii) such registration."
8. MISCELLANEOUS.
(a) Waivers Amendments and Approvals. No amendment or waiver of any
provision of this Agreement, shall in any event be effective against an Investor
unless the same shall be in writing and signed by such Investor and the Company,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
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(b) Changes, Waiver, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing.
(c) Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered if personally
delivered, the next business day if sent by overnight courier or when receipt is
acknowledged if mailed by first class mail, return receipt requested or if sent
by facsimile, telecopy or other electronic transmission device. Notices,
demands and communications will, unless another address is specified in writing,
be sent to the address indicated below:
Notices to the Company: with a copy to:
----------------------- ---------------
LaserMaster Technologies, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Investor: with a copy to:
-------------------- ---------------
General Electric Capital Corporation Winston & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(d) Remedies. The parties agree that, in addition to, but not to the
exclusion of any other available remedy, Investor shall have the right to
enforce the provisions of sections 5(e) and 5(f) by applying for and obtaining
specific performance or temporary and permanent restraining orders or
injunctions from a court of competent jurisdiction.
(e) Survival of Representations and Warranties, Etc. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by Investor or on
their behalf, and the sale and purchase of the Shares and payment therefor. All
statements contained in any certificate, instrument or other writing delivered
by or on behalf of the Company pursuant to this Agreement (other than legal
opinions) or in connection with or in contemplation of the transactions herein
contemplated shall constitute representations and warranties by the Company
hereunder.
(f) Headings. The headings of the Sections of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
(g) Choice of Law. The laws of Minnesota shall govern the validity
of this Agreement, the construction of its terms and the interpretation of the
rights and duties of the parties hereunder.
(h) Counterparts. This Agreement may be executed concurrently 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.
(i) Confidentiality. Investor agrees that the confidentiality
letter dated November 22, 1995 between Investor and LaserMaster Corporation, a
subsidiary of the Company ("LMC"), shall apply to all information provided by
the Company to the Investor hereunder as if the Company, rather than LMC, was a
party thereto and that Investor shall keep all such information provided to
Investor hereunder or pursuant hereto confidential to the same extent such
confidentiality letter requires Investor to keep information obtained from LMC
confidential.
(j) Entire Agreement. This Agreement and exhibits and schedules
referenced herein contain the entire agreement between the parties with respect
to the transactions contemplated hereby and
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thereby, and supersede all negotiations, agreements, representations,
warranties, commitments, whether in writing or oral, prior to the date hereof.
(k) Successors and Assigns. All of the terms of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided, however, that, except as
otherwise provided herein, Investor's rights and obligations under this
Agreement may only be assigned to any entity under common control of Investor.
(l) Severability. In the event any provision of this Agreement or
the application of any such provision to any party shall be held by a court of
competent jurisdiction to be contrary to law, the remaining provisions of this
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LASERMASTER TECHNOLOGIES, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Operating Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Its duly-authorized signatory
---------------------------------