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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
LaserMaster Technologies, Inc.
(Name of Issuer)
Common Stock, $.01 Par Value
-----------------------------
(Title of Class of Securities)
0005179 191
(CUSIP Number)
Melk M. Lehner, Chairman
Sihl-Zurich Paper Mill on Sihl AG
Giesshubelstrasse 15
CH-8045 Zurich
Switzerland
011-41-1-205-44-11
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
September 16, 1996
(Date of Event Which Required 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 this statement: [ X ]
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SCHEDULE 13D
CUSIP No.: 0005179 191
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1) NAME OF REPORTING PERSON, S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
SIHL-ZURICH PAPER MILL ON SIHL AG
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions)
(b) [X]
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3) SEC USE ONLY
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4) SOURCE OF FUNDS
(See Instructions)
BK
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5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e) [ ]
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6) CITIZENSHIP OR PLACE OF ORGANIZATION
SWITZERLAND
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7) SOLE VOTING POWER
2,742,858
NUMBER ---------------------------------------------
OF 8) SHARED VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH 2,742,858
REPORTING ---------------------------------------------
PERSON 10) SHARED DISPOSITIVE POWER
WITH: 0
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,742,858
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.956% (See Item 5)
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14) TYPE OF REPORTING PERSON
(See Instructions) CO
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (the "Statement") relates to the Common
Stock, $.01 par value (the "Common Stock"), of LaserMaster Technologies, Inc., a
Minnesota corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 7090 Shady Oak Road, Eden Prairie, MN 55344.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed on behalf of Sihl-Zurich Paper Mill on Sihl
AG ("Sihl" or the "Reporting Person"), a Swiss corporation. Sihl has its
principal offices at Giesshubelstrasse 15, CH-8045, Zurich, Switzerland. Sihl's
principal business is the manufacture of specialty papers and coatings.
The directors and executive officers of Sihl are set forth on Schedule I
attached hereto. Schedule I sets forth the following information with respect
to each such person:
(1) name;
(2) business address;
(3) present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted; and
(4) citizenship.
During the last five years neither Sihl nor any person named in Schedule I
attached hereto has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
During the last five years, neither Sihl nor any person named in Schedule I
attached hereto has been 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.
Pursuant to a Common Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of September 15, 1996, by and among the Issuer, Sihl, and
a business group (the "TimeMasters Group") consisting of TimeMasters, Inc., a
Minnesota corporation wholly owned by Melvin L. Masters (the President and Chief
Executive Officer of the Issuer), 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, Inc. serves as general partner, Sihl purchased (i) 1,371,429 shares
of the Common Stock of the Issuer; (ii) a warrant to purchase 868,572 shares of
Common Stock of the Issuer (the "First Warrant"); and (iii) a warrant to
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purchase 502,857 shares of Common Stock of the Issuer (the "Second
Warrant")(collectively, with the First Warrant, the "Warrants") by delivering a
promissory note (the "Sihl Note") to the Issuer in the principal amount of
$6,000,000.
The Sihl Note is payable in two installments: (i) a first installment of
$3,800,000 of the principal amount was due and payable on September 18, 1996;
and (ii) a second installment of $2,200,000 of the principal amount is due and
payable in the future upon the occurrence of certain events.
The Warrants are immediately exercisable by Sihl, and may be exercised by
Sihl at any time or from time to time on or prior to September 15, 2004 at an
exercise price of $7.00 per share of Common Stock, subject to adjustment.
The first installment on the Sihl Note was paid on September 18, 1996. The
funds for paying the first installment of the Sihl Note were supplied by Sihl's
drawing on its existing line of credit with Credit Suisse Bank. The terms of
this line of credit are contained in a Loan Agreement between Schweizerische
Kreditanstalt, Zurich, and Sihl-Zurcher Papierfabrik an der Sihl, Zurich [Sihl-
Zurich Paper Mill on Sihl AG], dated August 10, 1995, attached as Exhibit 5
hereto, which are incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
Concurrently with the execution of the Stock Purchase Agreement, pursuant
to which Sihl acquired the Issuer's Common Stock and the Warrants, the Issuer
and Sihl entered into a Strategic Alliance and Collaboration Agreement (the
"Strategic Alliance Agreement") to facilitate the development and marketing of
specialty coated media. At the same time, the Issuer and Sihl entered into a
Stock Pledge Agreement, dated September 15, 1996, whereby Sihl granted the
Issuer a security interest in the Issuer's Common Stock and the Warrants as
security for the payment by Sihl of its obligations under the Sihl Note.
Pursuant to the Strategic Alliance Agreement, the Issuer and Sihl will
collaborate on research and development and marketing in order to develop new
media and specialty coatings which are intended to address the growth of the
graphics and photo realistic segments of the inkjet printing industry.
Sihl has acquired the Issuer's Common Stock and the Warrants for the
purpose of making an investment in the Issuer and not with the present intention
of acquiring control of the Issuer's business. In connection with the Stock
Purchase Agreement, Sihl also has certain rights to acquire additional
securities of the Issuer pursuant to the provisions of Section 5(d) of the Stock
Purchase Agreement described in Item 6 below.
In addition, Sihl from time to time intends to review its investment in the
Issuer on the basis of various factors, including the Issuer's business,
financial condition, results of operations and prospects, general economic and
industry conditions, the securities markets in general and those for the
Issuer's securities in particular, as well as other developments and other
investment opportunities. Based upon such review, Sihl will take such actions
in the future as Sihl may deem appropriate in light of the circumstances
existing from time to time. If Sihl believes that further investment in the
Issuer is attractive, whether because of the market price of the Issuer's
securities or otherwise, it may acquire shares of Common Stock or other
securities of the Issuer either in the open market or in privately negotiated
transactions. Similarly, depending on market conditions, compliance with
applicable securities laws and other factors and the provisions of the Stock
Pledge Agreement, Sihl may determine
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to dispose of some or all of the securities currently owned by Sihl or otherwise
acquired by Sihl either in the open market or in privately negotiated
transactions.
Except as set forth in this Item 4 and in Item 6 below, Sihl has not
formulated any plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of the Issuer or the
disposition of securities of the Issuer; (b) an extraordinary corporate
transaction such as a merger, reorganization or liquidation involving the Issuer
or any of its subsidiaries; (c) a sale or transfer of a material amount of the
assets of the Issuer or any of its subsidiaries; (d) any change in the present
board of directors or management of the Issuer, including any plans or proposals
to change the number or term of directors or to fill any existing vacancies on
the board; (e) any material change in the Issuer's capitalization or dividend
policy; (f) any other material change in the Issuer's business or corporate
structure; (g) any change in the Issuer's charter or bylaws or other instrument
corresponding thereto or other action which may impede the acquisition of
control of the Issuer by any person; (h) causing a class of the Issuer's
securities to be deregistered or delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to
any of those enumerated above.
Sihl does not have any agreement or relationship, whether express or
implied, with the TimeMasters Group as to the acquisition or disposition or
voting of any securities of the Issuer.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As a result of its ownership of the Issuer Common Stock and the Warrants,
Sihl is the beneficial owner of 2,742,858 shares of Common Stock of the Issuer
(which includes the number of shares of Common Stock that may be acquired upon
exercise of the Warrants), representing 19.956% of the currently outstanding
shares of Common Stock of the Issuer (calculated based on 11,458,634 shares of
Common Stock outstanding as of September 1, 1996 and the sale of 914,286 shares
of Common Stock to the TimeMasters Group pursuant to the Stock Purchase
Agreement). Sihl has voting and dispositive power with respect to such shares
of Common Stock by virtue of its ownership of the Common Stock and the Warrants.
Except as described herein, neither Sihl nor any other person described on
Schedule I attached hereto has acquired or disposed of any shares of Common
Stock during the past sixty days.
Items 5(d) and (e) are inapplicable to the Reporting Person.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
As described in Item 4, Sihl purchased the Common Stock and Warrants
pursuant to the Stock Purchase Agreement. In addition to the matters discussed
in Item 4, the Stock Purchase Agreement in Section 5(d) provides that in the
event the Issuer decides to issue and sell additional shares of capital stock,
except for in certain enumerated cases, the Issuer shall offer to sell to Sihl
its pro rata share of such securities.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Common Stock Purchase Agreement, dated as of September 15, 1996,
by and among the Issuer, Sihl, and a business group (the
"TimeMasters Group") consisting of TimeMasters, Inc., a Minnesota
corporation wholly owned by Melvin L. Masters (the President and
Chief Executive Officer of the Issuer), 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, Inc. serves as general partner.
Exhibit 2. Warrant to purchase 868,572 shares of Common Stock of the Issuer
in the name of Sihl.
Exhibit 3. Warrant to purchase 502,857 shares of Common Stock of the Issuer
in the name of Sihl.
Exhibit 4. Stock Pledge Agreement, dated as of September 15, 1996, by and
between Sihl and the Issuer.
Exhibit 5. Loan Agreement between Schweizerische Kreditanstalt, Zurich, and
Sihl-Zurcher Papierfabrik an der Sihl, Zurich [Sihl-Zurich Paper
Mill on Sihl AG], dated August 10, 1995.
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SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Date: September 25, 1996
SIHL-ZURICH PAPER MILL ON SIHL AG
BY: /S/ MELK M. LEHNER
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ITS: CHAIRMAN
-------------------------------
BY: /S/ WERNER MERZ
-------------------------------
ITS: CHIEF FINANCIAL OFFICER
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
SIHL-ZURICH PAPER MILL ON SIHL AG
[Sihl-Zurcher Papierfabrik an der Sihl]
(1) Hans Gut
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Chief Executive Officer and Executive Director
(4) Swiss
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(1) Werner Merz
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Chief Financial Officer
(4) Swiss
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(1) Rene Hoppeler
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Human Resources
(4) Swiss
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(1) Walter Kaiser
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Manufacturing Zurich
(4) German
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(1) Bruno K. Hofstetter
(2) Papierfabriken Landquart
CH-7304 Landquart-Fabriken
Switzerland
(3) Manufacturing Landquart
(4) Swiss
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(1) Peter Oetterli
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Sales Manager
(4) Swiss
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(1) Paul A. Breidenstein
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Engineering
(4) Swiss
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(1) Josef Husler
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Manufacturing Zurich
(4) Swiss
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(1) Otto Mischler
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Finance
(4) Swiss
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(1) Melk M. Lehner
(2) Sihl-Zurcher Papierfabrik an der Sihl
Giesshubelstrasse 15
CH-8021 Zurich
Switzerland
(3) Chairman
(4) Swiss
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(1) Max Burger
(2) APAX Partners & Co.
Bahnhofstrasse 17
CH-8102 Zollikon
Switzerland
(3) Non-executive Director
(4) Swiss
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(1) Dr. Peter Kurer
(2) Homburger Rechtsanwalte
Weinbergstrasse 56/58
CH-8006 Zurich
Switzerland
(3) Non-executive Director
(4) Swiss
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EXHIBIT 1
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LASERMASTER TECHNOLOGIES, INC.
-------------------------
COMMON STOCK PURCHASE AGREEMENT
-------------------------
Dated September 15, 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 15th day of September,
1996, between LaserMaster Technologies, Inc., a Minnesota corporation (the
"Company"), Sihl-Zurich Paper Mill on Sihl AG , a Swiss corporation ("Sihl"),
and a business group (the "TimeMasters Group") consisting of TimeMasters, Inc.,
a Minnesota corporation wholly owned by Melvin L. Masters, 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, Inc. serves as general partner.
Sihl and the TimeMasters Group are sometimes together referred to herein as the
"Investors".
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Investors agree as follows:
1. AUTHORIZATION OF ISSUE OF SHARES. The Company has authorized (i) the
issue and sale of up to 2,694,000 shares of its Common Stock, $.01 par value per
share (the "Common Stock") and (ii) the issuance of Warrants to purchase up to
2,694,000 shares of its Common Stock to the Investors.
2. SALE AND PURCHASE PRICE.
(a) Effective on the date hereof (the "Effective Date"), and subject
to the terms and conditions herein set forth, Sihl shall purchase from the
Company the number of shares (the "Sihl Shares") of Common Stock as is
equal to $6 million divided by the purchase price (the "Purchase Price")
for such Shares and the TimeMasters Group shall purchase from the Company
the number of shares of Common Stock as is equal to $4 million divided by
the Purchase Price (the "TimeMasters Shares" and together with the Sihl
Shares, the "Shares"). The Purchase Price shall be equal to the last sale
price of the Common Stock on the Nasdaq National Market on the date
immediately preceding the date hereof; provided, however, that the Purchase
Price shall not be more than $4.5375 nor less than $3.7125. Simultaneous
with the purchase of Common Stock, the Company shall issue to each such
Investor a Warrant in the form of the attached Exhibit A (the "Warrants")
dated as of the date of such Closing, and without any additional
consideration, to purchase one share of Common Stock (subject to
appropriate adjustment in the event of stock splits, stock dividends or
other reorganizations) at an exercise price equal to one-hundred and sixty
percent (160%) of the Purchase Price for each Share purchased (the "Warrant
Shares").
(b) Simultaneous with execution of this Agreement (i) Sihl shall
purchase the Sihl Shares by delivering its promissory note in the form of
the attached Exhibit B for $6 million ("Sihl Promissory Note") and the
TimeMasters Group shall purchase the TimeMasters Shares by delivering its
promissory notes in form of the attached Exhibit C and Exhibit D in the
aggregate amount of $4 million (the "TimeMasters Promissory Notes" and
together with the Sihl Promissory Note, the "Promissory Notes"), and (ii)
the Company shall issue and deliver the Shares and Warrants to the
Investors. The Investors shall each simultaneously (i) execute a stock
pledge agreement in the form of Exhibit E (the "Stock Pledge Agreement")
and (ii) in accordance with the Stock Pledge Agreements, deliver the Shares
and Warrants to the Company, with associated stock powers executed in
blank. The TimeMasters Group and the Company shall also simultaneously
execute the Mortgage and Security Agreement and Fixture Financing Agreement
in the form of the attached Exhibit F (the "Mortgage").
3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
represents and warrants to the Investors 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
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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 Sihl 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 Sihl and the TimeMasters Group
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 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 the encumbrances created by the Stock
Pledge Agreements and 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 the
encumbrances created by the Stock Pledge Agreements and 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
the encumbrances created by the Stock Pledge Agreements and 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. No holder of any security of the Company is entitled to any
preemptive or similar rights to purchase any securities of the Company from the
Company.
(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
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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 Article 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 contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES BY THE INVESTORS. Each of the
Investors, for itself and not for any other 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. Each 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 Investors. Each 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) Each Investor understands that an exemption from such
registration is not presently available pursuant to Rule 144 promulgated under
the Securities Act by the Commission. Each Investor understands that any sales
pursuant to Rule 144 can be made only in full compliance with the provisions of
Rule 144.
(c) Each 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. Each Investor has relied upon such Investors' own
independent investigation and, to the extent believed appropriate, such
Investors' 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. Each of the Investors 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. Each of the Investors 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. Each of the
Investors has been furnished with all publicly available
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information about the Company's assets, operations, and business activities
which such Investor has requested and which such Investor considers necessary or
relevant to enable such Investor to make a prudent decision about the purchase
of the Shares and Warrants.
(d) The execution, delivery and performance of this Agreement by each
Investor and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action of each 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 each 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.
(e) The execution, delivery and performance of this Agreement by each
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 Article 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.
(f) 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 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.
(g) 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. Each Investor will indemnify, defend and hold the Company
harmless against any and all liability (including without limitation, reasonable
attorneys' fees and expenses) with respect to any such commission, fee or other
compensation which may be payable or determined to be payable in connection with
the transactions contemplated by this Agreement as a result of any act or
omission by the Investor.
5. COVENANTS OF THE COMPANY. So long as the Warrants shall remain
outstanding and not fully exercised, the Company covenants and agrees, and
solely with respect to section 5(f) Grandchildren's Realty Alternative
Management Program I Limited Partnership and Grandchildren's Realty Alternative
Management Program I #2 Limited Partnership (collectively "Grampi") covenant and
agree 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
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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 each 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 hereby grants to Sihl (but to no other Investor) the
right of first refusal to purchase its Pro-Rata Share (as defined below) of all
or any part of any New Securities (as defined in this Section 5(d)) that the
Company may, from time to time, propose to sell and issue. Sihl's "Pro-Rata
Share" shall be the ratio of the number of shares of Common Stock held by Sihl,
as of the date of the Rights Notice (as defined below) to the total number of
shares of Common Stock outstanding as of such date. The number of shares of
Common Stock held by Sihl shall be deemed to include the aggregate of the number
of shares of Common Stock held by Sihl (but shall not exceed the number of such
shares constituting the Shares purchased by Sihl hereunder, plus any shares
issued in any stock splits, stock dividends, recapitalization, reclassification
and similar events with respect to such Shares or pursuant to exercise of the
right of first refusal pursuant to this Section 5(d)) together with the number
of shares of Common Stock issuable upon exercise of the Warrant (as if the
Warrant had been exercised in full), and the number of shares of Common Stock
outstanding shall be deemed to include the aggregate of (A) all Common Stock
outstanding, (B) all Common Stock issuable upon exercise of all outstanding
options or warrants to purchase Common Stock and (C) the conversion of all
outstanding convertible securities and of all convertible securities issuable
upon exercise of outstanding options or warrants to purchase convertible
securities. "New Securities" shall mean any Common Stock or preferred shares of
any kind of the Company, whether now or hereafter authorized, and rights,
options, or warrants to purchase said Common Stock or preferred shares, and
securities of any type whatsoever that are, or may become, convertible into said
Common Stock or preferred shares; provided, however, that "New Securities" shall
not include securities issued in any of the transactions set forth in Schedule
I. If the Company proposes to issue New Securities, it shall give Sihl written
notice (the "Rights Notice") of its intention, describing the New Securities,
the price, and the general terms upon which the Company proposes to issue them.
Sihl shall have ten (10) business days from the date of mailing of the Rights
Notice to agree to purchase all or any part of its pro-rata share of such New
Securities, for the price and upon the general terms specified in the Rights
Notice by giving written notice to the Company setting forth the quantity of New
Securities to be purchased. The rights of Sihl under this Section 5(d) shall
terminate and be of no further force or effect on and after the date on which
its "Pro-Rata Share" (as defined above but without the parenthetical limitation
above as to the number of Shares purchased hereunder) is less than ten percent
(10%).
(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. dated January 17, 1996 (the "January Note") in
original principal amount of $1,765,000 until payment in full of 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 Promissory Notes. Sihl 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 or the TimeMasters Promissory Note attached hereto as Exhibit
D (the "Mortgage Note"), 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 Sihl
otherwise agrees in writing that such remedy shall be further delayed. The
Company and GRAMPI acknowledge that the agreement of Sihl hereunder, and the
timing of the payments of the Sihl Promissory Note, is conditional on the
payment of the
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TimeMasters Promissory Notes. Accordingly, the Company and GRAMPI agree that
Sihl may exercise the Company's rights under the Mortgage on behalf of the
Company through the receivership described in Section 8(d).
6. REGISTRATION.
(a) DEFINITIONS. As used in this Section 6, the following terms have
the following meanings:
(i) "Forms S-1, SB-1, S-2, SB-2 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. Registrable Stock does not include any common stock
currently held by the TimeMasters Group (including shares held by Melvin
Masters and his affiliates and family members).
(b) REQUIRED REGISTRATION.
(i) If at any time until two years after the earlier to
occur of the full exercise, or the termination, of the Warrants 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 effective as provided
herein;
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(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 S-1, SB-1,
SB-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;
and
(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.
(d) LIMITATIONS ON REQUIRED REGISTRATIONS.
(i) The TimeMasters Group (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(b)) and Sihl (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.
(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.
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(e) INCIDENTAL REGISTRATION. If the Company at any time until two
years after the earlier to occur of the full exercise, or the termination, of
the Warrants 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
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 Selling
Shareholders' Shares originally covered by a request for registration
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 the holders thereof requesting such registration (based upon the
number of shares requested to be included by each such holder), other
than holders of 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 .
(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 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 (the Registrable
Stock and all of the other shares requested for inclusion are herein
together referred to as the "Other Selling Shareholders' Shares") pursuant
to the incidental registration rights granted by the Company prior to the
date hereof (including permitted transferees and assignees of such
incidental registration rights), 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 Other 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 or Other 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 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).
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(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 Holders, 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 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 such Indemnitee and stated to be specifically
for use therein and except that 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
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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; PROVIDED,
FURTHER, that this indemnity shall not be deemed to relieve any underwriter
of any of its due diligence obligations; PROVIDED, FURTHER, that 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 PROVIDED, FURTHER,
that 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 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 and except that 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; PROVIDED, FURTHER, that this
indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations; PROVIDED, FURTHER, that 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; PROVIDED, FURTHER, that 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 PROVIDED, FURTHER, that the foregoing shall not
create 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,
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
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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.
(j) TRANSFER OF REGISTRATION RIGHTS. One or more of the five demand
registration rights granted to each 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); provided, however, that the rights under
section 6(e) shall apply to all members of the TimeMasters Group who acquire
Registrable Stock. 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.
(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:
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NOTICES TO THE COMPANY: WITH A COPY TO:
LaserMaster Technologies, Inc. Dorsey & Whitney LLP
7090 Shady Oak Road 220 South Sixth Street
Eden Prairie, Minnesota 55344 Minneapolis, Minnesota 55402
Attention: General Counsel Attention: Thomas O. Martin, Esq.
Telecopy: (612) 941-8687 Telecopy: (612) 340-8738
NOTICES TO SIHL: WITH A COPY TO:
Sihl-Zurich Paper Mill on Sihl AG Homburger Rechtsanwalte
Giesshubelstrasse 15 Weinbergstrasse 56/58
CH-8045 Zurich CH-8006 Zurich
Switzerland Switzerland
Attention: Mr. Melk M. Lehner, Attention: Mr. Ueli Huber
Chairman Telecopy:011-41-1-265-35-11
Telecopy: 011-41-1-205-48-35
AND:
Oppenheimer Wolff & Donnelly
3400 Plaza VII Building
45 South Seventh Street
Minneapolis, Minnesota 55402-1609
Attention: Steven A. Wellvang, Esq.
Telecopy: (612) 344-9376
NOTICES TO THE TIMEMASTERS GROUP:
TimeMasters, Inc.
6245 Beach Road
Eden Prairie, MN 55344
Attention: Melvin Masters
Telecopy: (612) 942-8911
(d) REMEDIES. The parties agree that, in addition to, but not to the
exclusion of any other available remedy, Sihl shall have the right to enforce
the provisions of sections 5(d), 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. In addition, in the event
that the Company fails to commence foreclosure proceedings in accordance with
Section 5(d) within 60 days after notice of an event of default, the Company and
GRAMPI agree that Sihl shall have the right, without notice and without giving
bond and without regard to the solvency or insolvency of the Company or GRAMPI,
or waste of the premises or adequacy of the security of the premises, to apply
on behalf of the Company for the appointment of a receiver under any statute or
law who shall have all the rights, powers and remedies as provided by such
statute or law, including without limitation the rights of receiver pursuant to
Minn. Stat. Section 576.01, as amended, and who shall from the date of his
appointment through any period of redemption existing at law collect the rents,
and all other income of any kind; manage the premises so as to prevent waste;
and perform the terms, including any rights to foreclosure on behalf of the
Company, of the Mortgage, and apply the rents, issues and profits to the payment
of the expenses enumerated in Minn. Stat. Section 576.01, Subd. 2 in the
priority mentioned therein and to all expenses for maintenance of the premises
and to the costs and expenses of the receivership, including attorney's fees, to
the repayment of the indebtedness secured by the first mortgage and then of the
Mortgage Note and as further provided in any assignment of leases and rents
executed by the Mortgagor to the Mortgagee whether contained in this Mortgage or
in a separate instrument. GRAMPI does hereby irrevocably consent to such
appointment. The Company further agrees that, in the event a receiver is
appointed as provided in this subparagraph (d), the Company shall promptly grant
such receiver a power of attorney to authorize the receiver and/or its legal
counsel to foreclose on the Mortgage on behalf of the Company.
(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 Sihl 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
-13-
<PAGE>
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) PARTIES IN INTEREST. All the terms and provisions 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, whether so expressed or
not, and, in particular, shall inure to the benefit of and be enforceable by the
holder or holders from time to time of any of the Purchased shares.
(g) 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.
(h) 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.
(i) 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.
(j) DEFINITION OF PURCHASED SHARES. For purposes of this Agreement the
term "Purchased Shares" shall refer to and include (a) the Shares, (b) the
Warrant Shares, (c) any shares of capital stock of the Company issued with
respect to, or in exchange for, any of the foregoing in any corporate
recapitalization or corporate restructuring and (d) all shares of the Company's
capital stock which Sihl may purchase pursuant to their preemptive rights or
rights of first refusal or otherwise.
(k) CONFIDENTIALITY. Sihl agrees that it shall not divulge, furnish
or make accessible to anyone or use in any way any confidential or secret
knowledge or information of the Company which Sihl has acquired or become
acquainted with or will acquire or become acquainted with pursuant to the
terms of this Agreement, except that Sihl may use such knowledge or
information in furtherance of its interests as an investor in the Company.
Sihl acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for the
sole benefit of the Company would be wrongful and would cause irreparable
harm to the Company. Sihl will refrain from any acts or omissions that would
reduce the value of such knowledge or information to the Company. The
foregoing obligations of confidentiality shall not apply to any knowledge or
information which is now published or which subsequently becomes generally
publicly known in the form in which it was obtained from the Company, other
than as a direct or indirect result of the breach of this agreement.
(l) 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 thereby, and supersede all
negotiations, agreements, representations, warranties, commitments, whether in
writing or oral, prior to the date hereof.
(m) 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, Sihl's rights and obligations under this Agreement
may only be assigned to any entity under common control of Sihl.
(n) 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.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Very truly yours,
LASERMASTER TECHNOLOGIES, INC.
By
---------------------------------------
Name: Robert Wenzel
Title: Chief Operating Officer
SIHL-ZURICH PAPER MILL ON SIHL AG
By
---------------------------------------
Its
------------------------------------
TIMEMASTERS, INC.
By
---------------------------------------
Melvin Masters, Chief Executive Officer
Grandchildren's Realty Alternative Management
Program I Limited Partnership and Grandchildren's
Realty Alternative Management Program I #2 Limited
Partnership
By TimeMasters, Inc., their General Partner
By
---------------------------------------
Melvin Masters, Chief Executive Officer
-15-
<PAGE>
EXHIBIT 2
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH SECURITY OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THIS SECURITY
(CONCURRED IN BY COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT, PLEDGE OR DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ALL
APPLICABLE STATE SECURITIES LAWS.
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
OF
LASERMASTER TECHNOLOGIES, INC.
For value received, Sihl-Zurich Paper Mill on Sihl AG , a Swiss
corporation, or its successors or assigns ("Investor"), is entitled to subscribe
for and purchase from LaserMaster Technologies, Inc., a Minnesota corporation
(the "Company"), up to Eight Hundred Sixty Eight Thousand, Five Hundred Seventy
Two (868,572) fully paid and nonassessable shares of the Company's common stock,
$.01 par value per share (the "Common Stock"), or such greater or lesser number
of such shares as may be determined by application of the anti-dilution
provisions of this Warrant, at the price of seven dollars ($7.00) per share (as
the same may be adjusted as herein provided, "the Warrant Exercise Price"), all
subject to the adjustments noted below.
This Warrant may be exercised by Investor at any time or from time to
time on or prior to September 15, 2004.
This Warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this Warrant (properly endorsed, if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares, or pursuant to the
conversion right set forth in section 1(b). The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
Warrant has been exercised. Certificates for the shares of stock so purchased,
bearing the restrictive legend set forth at the beginning of this Warrant, shall
be delivered to the holder within fifteen (15) days after the rights represented
by this Warrant shall have been so exercised, and, unless this Warrant has
expired, a new warrant representing the number of shares, if any, with respect
to which this Warrant has not been exercised shall also be delivered to the
holder hereof within such time. No fractional shares shall be issued upon the
exercise of this Warrant.
(b) In lieu of payment of the purchase price in cash, the rights
represented by this Warrant may also be exercised, in whole or in part, by
written notice of exercise specifying that the Investor wishes to convert any or
all of this Warrant into that number of shares of Common Stock as shall be equal
to the quotient obtained by dividing (i) the aggregate value of the shares to be
received upon
<PAGE>
conversion of the Warrant (determined by subtracting the aggregate Warrant
Exercise Price for the shares to be converted from the aggregate fair market
value of such shares) by (ii) the fair market value of one share of Common
Stock. For purposes of this Section 1(b), the fair market value of a share of
Common Stock shall be determined as follows:
(i) If the Company's Common Stock is traded on a national
securities exchange, then the fair market value of a share of Common Stock shall
equal the closing price of the Common Stock on such exchange on the date of the
conversion of the Warrant;
(ii) If the Company's Common Stock is quoted on Nasdaq National
or Small Cap. Market, then the fair market value of a share of Common Stock
shall equal the average of the closing representative bid and asked prices of
the Common Stock as reported on Nasdaq on the date of the conversion of the
Warrant; or
(iii) If the Company's Common Stock is not publicly traded, then
the fair market value of a share of Common Stock shall equal the purchase price
per share for the most recent sale of at least $100,000 of the Company's equity
securities.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants 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 for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. The Warrant Exercise Price shall be subject to adjustment from
time to time as hereinafter provided in this section 3.
(a) If the Company at any time divides the outstanding shares of its
Common Stock into a greater number of shares (whether pursuant to a stock split,
stock dividend or otherwise), and conversely, if the outstanding shares of its
Common Stock are combined into a smaller number of shares, the Warrant Exercise
Price in effect immediately prior to such division or combination shall be
proportionately adjusted to reflect the reduction or increase in the value of
each such common share.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such common shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the holder of
this Warrant shall have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, other securities or assets as would have been issued or delivered to
the holder of this Warrant if it had exercised this Warrant and had received
such shares of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed to the registered holder of this
Warrant at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
<PAGE>
(c) If the Company takes any other action, or if any other event
occurs, which does not come within the scope of the provisions of section 3(a)
or 3(b), but which should result in an adjustment in the Warrant Exercise Price
and/or the number of shares subject to this Warrant in order to fairly protect
the purchase rights of the holder of this Warrant, an appropriate adjustment in
such purchase rights shall be made by the Company.
(d) Upon each adjustment of the Warrant Exercise Price, the holder of
this Warrant shall thereafter be entitled to purchase, at the Warrant Exercise
Price resulting from such adjustment, the number of shares obtained by
multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Warrant Exercise
Price resulting from such adjustment.
(e) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
5. The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this Warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this Warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this Warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this Warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this Warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this Warrant, or to exercise
this Warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this Warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
Warrant or the certificates for such shares.
6. Subject to the provisions of section 5, this Warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant properly endorsed to any person or entity who
represents in writing that such person or entity is acquiring the Warrant for
investment and without any view to the sale or other distribution thereof. Each
holder of this Warrant, by taking or holding the same, consents and agrees that
the bearer of this Warrant, when endorsed, may be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered owner hereof as the owner for all purposes.
<PAGE>
7. Investor shall be entitled, with respect to the shares of Common
Stock issued upon exercise of this Warrant, to the registration rights set forth
in section 6 of the common stock purchase agreement, dated September 15, 1996,
between the Company and Investor, the terms of which are incorporated herein by
reference.
8. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and delivered by a duly authorized officer as of the 15th day of September,
1996.
LASERMASTER TECHNOLOGIES, INC
By
------------------------------
Robert Wenzel, Chief Operating Officer
<PAGE>
EXHIBIT 3
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH SECURITY OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THIS SECURITY
(CONCURRED IN BY COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT, PLEDGE OR DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ALL
APPLICABLE STATE SECURITIES LAWS.
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
OF
LASERMASTER TECHNOLOGIES, INC.
For value received, Sihl-Zurich Paper Mill on Sihl AG , a Swiss
corporation, or its successors or assigns ("Investor"), is entitled to subscribe
for and purchase from LaserMaster Technologies, Inc., a Minnesota corporation
(the "Company"), up to Five Hundred Two Thousand, Eight Hundred Fifty Seven
(502,857) fully paid and nonassessable shares of the Company's common stock,
$.01 par value per share (the "Common Stock"), or such greater or lesser number
of such shares as may be determined by application of the anti-dilution
provisions of this Warrant, at the price of seven dollars ($7.00) per share (as
the same may be adjusted as herein provided, "the Warrant Exercise Price"), all
subject to the adjustments noted below.
This Warrant may be exercised by Investor at any time or from time to
time on or prior to September 15, 2004.
This Warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this Warrant (properly endorsed, if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares, or pursuant to the
conversion right set forth in section 1(b). The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
Warrant has been exercised. Certificates for the shares of stock so purchased,
bearing the restrictive legend set forth at the beginning of this Warrant, shall
be delivered to the holder within fifteen (15) days after the rights represented
by this Warrant shall have been so exercised, and, unless this Warrant has
expired, a new warrant representing the number of shares, if any, with respect
to which this Warrant has not been exercised shall also be delivered to the
holder hereof within such time. No fractional shares shall be issued upon the
exercise of this Warrant.
(b) In lieu of payment of the purchase price in cash, the rights
represented by this Warrant may also be exercised, in whole or in part, by
written notice of exercise specifying that the Investor wishes to convert any or
all of this Warrant into that number of shares of Common Stock as shall be equal
to the quotient obtained by dividing (i) the aggregate value of the shares to be
received upon
<PAGE>
conversion of the Warrant (determined by subtracting the aggregate Warrant
Exercise Price for the shares to be converted from the aggregate fair market
value of such shares) by (ii) the fair market value of one share of Common
Stock. For purposes of this Section 1(b), the fair market value of a share of
Common Stock shall be determined as follows:
(i) If the Company's Common Stock is traded on a national
securities exchange, then the fair market value of a share of Common Stock shall
equal the closing price of the Common Stock on such exchange on the date of the
conversion of the Warrant;
(ii) If the Company's Common Stock is quoted on Nasdaq National
or Small Cap. Market, then the fair market value of a share of Common Stock
shall equal the average of the closing representative bid and asked prices of
the Common Stock as reported on Nasdaq on the date of the conversion of the
Warrant; or
(iii) If the Company's Common Stock is not publicly traded, then
the fair market value of a share of Common Stock shall equal the purchase price
per share for the most recent sale of at least $100,000 of the Company's equity
securities.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants 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 for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. The Warrant Exercise Price shall be subject to adjustment from
time to time as hereinafter provided in this section 3.
(a) If the Company at any time divides the outstanding shares of its
Common Stock into a greater number of shares (whether pursuant to a stock split,
stock dividend or otherwise), and conversely, if the outstanding shares of its
Common Stock are combined into a smaller number of shares, the Warrant Exercise
Price in effect immediately prior to such division or combination shall be
proportionately adjusted to reflect the reduction or increase in the value of
each such common share.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such common shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the holder of
this Warrant shall have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, other securities or assets as would have been issued or delivered to
the holder of this Warrant if it had exercised this Warrant and had received
such shares of Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed to the registered holder of this
Warrant at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
<PAGE>
(c) If the Company takes any other action, or if any other event
occurs, which does not come within the scope of the provisions of section 3(a)
or 3(b), but which should result in an adjustment in the Warrant Exercise Price
and/or the number of shares subject to this Warrant in order to fairly protect
the purchase rights of the holder of this Warrant, an appropriate adjustment in
such purchase rights shall be made by the Company.
(d) Upon each adjustment of the Warrant Exercise Price, the holder of
this Warrant shall thereafter be entitled to purchase, at the Warrant Exercise
Price resulting from such adjustment, the number of shares obtained by
multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Warrant Exercise
Price resulting from such adjustment.
(e) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
5. The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this Warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this Warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this Warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this Warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this Warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this Warrant, or to exercise
this Warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this Warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
Warrant or the certificates for such shares.
6. Subject to the provisions of section 5, this Warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant properly endorsed to any person or entity who
represents in writing that such person or entity is acquiring the Warrant for
investment and without any view to the sale or other distribution thereof. Each
holder of this Warrant, by taking or holding the same, consents and agrees that
the bearer of this Warrant, when endorsed, may be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered owner hereof as the owner for all purposes.
<PAGE>
7. Investor shall be entitled, with respect to the shares of Common
Stock issued upon exercise of this Warrant, to the registration rights set forth
in section 6 of the common stock purchase agreement, dated September 15, 1996,
between the Company and Investor, the terms of which are incorporated herein by
reference.
8. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and delivered by a duly authorized officer as of the 15th day of September,
1996.
LASERMASTER TECHNOLOGIES, INC
By
----------------------------------------
Robert Wenzel, Chief Operating Officer
<PAGE>
EXHIBIT 4
STOCK PLEDGE AGREEMENT
AGREEMENT, made this 15th day of September, 1996, by and between
Sihl-Zurich Paper Mill on Sihl AG , a Swiss corporation ("Pledgor"), and
LaserMaster Technologies, Inc., a Minnesota corporation ("Company").
WHEREAS, Pledgor and Company have entered into that certain stock
purchase agreement, dated the date hereof, pursuant to which Pledgor agreed to
purchase from Company, and Company agreed to sell to Pledgor, One Million,
Three Hundred Seventy One Thousand, Four Hundred Twenty Nine (1,371,429) shares
of Company's common stock and warrants to purchase One Million, Three Hundred
Seventy One Thousand, Four Hundred Twenty Nine (1,371,429) shares of Company's
common stock (the "Pledged Securities"); and
WHEREAS, Pledgor has delivered to Company a promissory note (the
"Promissory Note") in payment of the purchase price for the Pledged Securities;
and
WHEREAS, Company has required that Pledgor grant to Company, and
Pledgor is willing to grant to Company, a security interest in the Pledged
Securities as security for the payment by Pledgor of its obligations under the
Promissory Note.
NOW THEREFORE, in consideration of the premises, the respective
covenants of Company and Pledgor set forth below and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Pledgor and Company agree as follows:
1. PLEDGE OF STOCK.
1.1 PLEDGE. As security for the prompt payment of any amount at any
time due, whether or not by acceleration, to Company from Pledgor pursuant to
the Promissory Note, Pledgor hereby grants a security interest to Company in the
Pledged Securities.
1.2 DELIVERY. Immediately upon execution of this agreement, Pledgor
will deliver to Company the certificates representing all of the Pledged
Securities, which certificates shall be endorsed in blank or with executed stock
powers attached.
2. RIGHTS AND BENEFITS OF PLEDGED SECURITIES.
2.1 GENERAL. Except as provided in section 2.2, Company shall
receive and hold the Pledged Securities and any property (including without
limitation monies or securities) distributed or issued with respect to the
Pledged Securities, whether as a dividend, in partial or complete liquidation,
pursuant to a merger or reorganization plan or otherwise. Pledgor shall cause
any securities distributed or issued with respect to the Pledged Securities to
be assigned and transferred to Company and delivered to Company in the manner
provided in section 1.2, and such securities shall be subject to the terms and
conditions of this agreement.
2.2 VOTING. Unless and until a default is declared by Company
pursuant to section 5, Pledgor shall be entitled to vote the Pledged Securities.
From and after an event of default, all rights of the Pledgor to vote the
Pledged Securities shall be suspended and the Pledgor does hereby grant to the
Board of Directors of the Company, its irrevocable proxy to vote the Pledged
Securities, or to refrain from voting the same, in their discretion.
<PAGE>
2.3 ASSIGNMENT, ETC. Except as provided or specifically permitted
herein, Pledgor shall not pledge, sell, assign, transfer or otherwise dispose of
the Pledged Securities without the prior written approval of Company.
3. LEGEND.
The certificates representing the Pledged Securities shall bear an
endorsement in substantially the following form:
"The shares of stock represented by this certificate are pledged
under, and are subject to the terms and conditions of a Stock
Pledge Agreement, dated September , 1996, between the issuer
and the registered owner of this certificate as security for the
performance of the registered owner's obligations under a
promissory note to the issuer. Such shares cannot be sold,
assigned, transferred, pledged or disposed of except as provided
in such Stock Pledge Agreement."
4. APPOINTMENT OF COMPANY AS ATTORNEY-IN-FACT.
Pledgor hereby appoints and constitutes Company as Pledgor's true and
lawful attorney-in-fact and with full power of substitution in the premises to
execute such assignments and/or endorsements of the Pledged Securities as may be
necessary to effect the rights and remedies which Company has under this
agreement in the event of a default under this agreement.
5. EVENT OF DEFAULT.
Any default in payment when due under the Promissory Note constitutes
a default under this agreement.
Upon the occurrence of an event of default, and provided that the
Company has completed foreclosure of that certain Mortgage and Security
Agreement and Fixture Financing Agreement of even date herewith securing the
promissory note of Grandchildren's Realty Alternative Management Program I
Limited Partnership and Grandchildren's Realty Alternative Management Program I
#2 Limited Partnership to Company in original principal amount of $2,200,000
(affiliated limited partnerships) and applicable periods of redemption have
expired, Company shall have the option to declare this agreement in default and
thereupon Company is authorized to exercise and shall have, in addition to the
rights and remedies provided in this agreement and all other applicable rights
and remedies, the rights and remedies of a secured party under the Uniform
Commercial Code of the state of Minnesota and any other applicable laws. In
particular, and without limitation, Company is authorized at its option and
without further notice or demand, to cause the Pledged Securities to be
transferred of record to Company or its agent or nominee and shall be entitled
to exercise all rights of ownership in respect to the Pledged Securities and all
property received with respect to the Pledged Securities. Company shall also
have the right to hold and vote the Pledged Securities and, at its option and
upon twenty (20) days' notice in writing to Pledgor of such default, shall have
the right to sell and transfer the Pledged Securities and the property received
with respect to the Pledged Securities or any portion thereof at any public or
private sale, including private placement based upon investment representations,
and for cash or such other consideration as Company shall, in its sole
discretion, determine to be reasonable, and Pledgor shall have no right or
equity of redemption in connection with any such sale; provided, however, that
during such twenty (20) day period Pledgor shall have the right to cure any
default by paying all obligations under the Promissory Note, together with all
expenses incurred by Company including, without limitation, reasonable
attorneys' fees and expenses in obtaining, holding and preparing for sale the
Pledged Securities and the property received with respect to the Pledged
Securities and in arranging
<PAGE>
for the sale. After deducting the expenses of such sale, including reasonable
attorneys' fees, the proceeds therefrom shall be applied to the payment of
Pledgor's obligations under the Promissory Note and the surplus, if any, shall
be paid to Pledgor.
6. RELEASE OF COLLATERAL.
At such time as the Promissory Note has been paid in part or in full,
and on the date or dates of such payment, whether by action of Pledgor or by
collection thereof after default through foreclosure (other than a foreclosure
of the pledge of the Pledged Securities) or otherwise, Company shall deliver to
Pledgor the amount of the Pledged Securities that represents the original amount
of such Pledged Securities held hereunder multiplied by the ratio of the
principal amount of such payment divided by the total original principal amount
of the Promissory Note, and Pledgor shall thereafter be discharged from any and
all obligations under this agreement with respect to the Pledged Securities so
delivered.
7. DELAY; WAIVER.
All rights and remedies of Company under this agreement are cumulative
and are in addition to, but not in limitation of, any rights or remedies which
it may have under applicable law. No delay on the part of Company in the
exercise of any right or remedy under this agreement shall operate as a waiver
thereof, and no single or partial exercise by Company of any right or remedy
under this agreement shall preclude other or further exercise thereof or the
exercise of any other right or remedy. No waiver by Company of any right or
remedy under this agreement shall be deemed to be or construed as a further or
continuing waiver of such right or remedy or as a waiver of any other right or
remedy.
8. COOPERATION.
Upon the execution of this agreement and at any time or from time to
time thereafter, Pledgor and Company agree to cooperate in carrying out the
terms of this agreement, including the execution and delivery of such further
instruments and documents as may be reasonably requested in order to more
effectively carry out the terms and conditions of this agreement.
9. MISCELLANEOUS.
This agreement shall be binding upon, and inure to the benefit of and
be enforceable by Pledgor and Company and their respective successors and
assigns, but this agreement shall not be assignable without written permission
of the other party. The section headings are for reference purposes only and
shall not in any way affect the meaning or interpretation of this agreement.
This agreement shall be governed by, and, construed and enforced in accordance
with, the laws of the state of Minnesota. 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.
<PAGE>
IN WITNESS WHEREOF, Pledgor and Company have executed this agreement
as of the date set forth in the first paragraph.
LASERMASTER TECHNOLOGIES, INC.
By
-----------------------------------------
Robert Wenzel, Chief Operating Officer
SIHL-ZURICH PAPER MILL ON SIHL AG
By
-----------------------------------------
Melk Lehner, Chief Executive Officer
<PAGE>
EXHIBIT 5
(Translation of Loan Agreement between Schweizerische Kreditanstalt, Zurich, and
Sihl-Zurcher Papierfabrik an der Sihl, Zurich [Sihl-Zurich Paper Mill on Sihl
AG], dated August 10, 1995)
To the management of
Sihl, Zurcher Papierfabrik
an der Sihl
P.O. Box
CH-8021 Zurich
Zurich, August 10, 1996
REF: KRDT-SKA
Dear Sirs,
We refer to our recent discussion between Mr. W. Merz and Mr. Ch. Gut as well as
Mrs. B. Fischer. We are pleased to confirm the renewal of your lines of credit:
1. OPERATING FACILITY
Line: CHF 10'000'000. - (Swiss Francs ten million)
Utilization: With your current account No. 438 923-81
and/or existing or future foreign exchange accounts
and/or in the form of fixed term loans for a period of up
to 12 months.
Guarantees will be considered against this line of credit.
Conditions: For the CHF-Current account for the time being:
Interest: 6 % p.a.
Credit commission: 1/4% p.quarter
1/4% p.quarter, less 35% federal
withholding tax
We reserve the right to adjust interest rates to the
conditions on the money and capital market at any time.
The current accounts, which are part of the Cash-Pool, are
subject to the conditions of a separate Cash-Pool
agreement.
Interest on foreign exchange accounts may be adjusted to
market conditions without prior notice. The credit
commission of 1/4% p.quarter will be calculated on the
average utilization of the line of credit. Positive
balances in foreign exchange do not earn interest.
<PAGE>
The interest rate for fixed term loans will be determined
at the time a loan is granted. It will be set in
consideration of the conditions on the money and capital
market.
Closing dates: Interest will be charged at the close of every quarter, be
credited every 6 months. Interest on fixed term loans
will be charged at maturity.
Termination: Both parties have the right to terminate this agreement at
any time.
2. FIXED TERM FACILITY
Line: CHF 9'000'000.-(Swiss Francs nine million)
Utilization: Fixed term loans for periods ranging from one month to
max. five years.
Conditions: The interest rate granted term loans will be determined
at the time a loan is granted. It will be set in
consideration of the conditions on the money and capital
market.
Closing dates: Interest on fixed term loans concluded for a period of
12 months will be charged every 6 months, otherwise at
maturity.
Termination: Both parties have right to terminate this agreement at any
time.
FOR BOTH LINES OF CREDIT THE FOLLOWING PROVISIONS APPLY:
* You will not, during the term of this agreement, provide specific
collateral for any liability of the same kind without providing us with a
collateral of the same value.
* You will provide us once a year with the balance sheet, statement of income
as well as the report of the Group Auditors of your company. We confirm
that we will treat these documents with utmost confidentiality.
Besides we refer to our "General Terms and Conditions" of our bank which are
known to you and which form an integrated part of this credit agreement. This
agreement replaces our letter dated February 17, 1994 in every respect.
<PAGE>
We hope that the good personal contact will continue to provide a basis for our
cooperation and we wish you all the best for the current year.
Yours truly,
SCHWEIZERISCHE KREDITANSTALT
Dr. Martin Wetter Christian Gut
