Exhibit 10.04
THE OBLIGATIONS OF LASERMASTER CORPORATION HEREUNDER ARE SUBORDINATED TO CERTAIN
SENIOR INDEBTEDNESS TO THE EXTENT AND ON THE TERMS SET FORTH IN THAT CERTAIN
REPAYMENT, SUBORDINATION AND INTERCREDITOR AGREEMENT DATED AS OF JANUARY 17,
1996 BY AND AMONG LASERMASTER CORPORATION, LASERMASTER ASIA/PACIFIC, LTD.,
COLORMASTERS, INC., TIMEMASTERS, INC. AND GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT, AS SUCH AGREEMENT IS FROM TIME TO TIME AMENDED.
THE CONVERSION RIGHT REPRESENTED BY THIS PROMISSORY NOTE AND THE SHARES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)
LASERMASTER TECHNOLOGIES, INC. RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
LASERMASTER TECHNOLOGIES, INC., THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
Minneapolis, Minnesota
$1,765,000.00 January 17, 1996
FOR VALUE RECEIVED, LaserMaster Corporation, a Minnesota corporation
("BORROWER"), promises to pay to the order of TimeMasters, Inc., a Minnesota
corporation, or its successors and permitted assigns (collectively, "HOLDER"),
the principal sum of One Million Seven Hundred Sixty Five Thousand and No/100
Dollars ($1,765,000.00) with interest thereon at the rate of one and three
quarters percent (1.75%) above the Prime Rate (as hereinafter defined) upon
demand. Until demand, interest shall be paid on the first day of each month,
commencing on February 1, 1996 and continuing on the same day of each subsequent
month.
1. LOAN AGREEMENT. This Note is executed and delivered pursuant to a Loan
Agreement of even date herewith between Holder and Borrower (the "LOAN
AGREEMENT"). Capitalized terms utilized in this Note, and not separately defined
herein, shall have the meanings ascribed to such terms in the Loan Agreement.
The provisions of Section 4 of the Loan Agreement are, by this reference
thereto, incorporated into the body of this Note and made a part hereof by such
reference.
2. PRIME RATE DETERMINATION. The term "PRIME RATE" as used in this
Promissory Note (the "NOTE") means an annual interest rate equal to the rate per
annum publicly announced by Norwest Bank, N.A. ("NORWEST") at its principal
office from time to time as being its prime rate. The Prime Rate shall change
automatically, without notice and simultaneously with each change in such prime
rate announced by Norwest. In the event that Norwest ceases to announce
the term "Prime Rate" in setting a base rate of interest for commercial loans,
the Prime Rate herein shall be determined by reference to the rate announced in
substitution for such prime rate by Norwest as such base rate is designated by
Norwest. A certificate of Holder as to such prime rate in effect on any day
shall, for the purposes hereof, be conclusive evidence of such prime rate in
effect on such date. The rate of interest hereunder shall be calculated on the
basis of a 365-day year and shall be adjusted daily on the same day the Prime
Rate changes.
3. APPLICATION OF PAYMENTS; PREPAYMENT PRIVILEGE. Each payment shall be
applied first in payment of interest, and the balance to unpaid principal,
except that, if there are at any time costs, expenses, late fees, advances or
other sums, including any interest thereon, for which Holder is entitled to
payment under this Note, Loan Agreement or any Security Document, then Holder
may, at its option, first apply all or part of any payments to such items.
Prepayment in full or in part may be made at any time without penalty. Partial
prepayment shall not reduce the amount of payments required after the date of
such partial prepayment.
4. LATE CHARGES. If any amount due hereunder is not paid within five (5)
business days of the date due, Borrower agrees to pay a late charge in order to
defray the expense incident to handling such delinquent payment, provided state
law does not proscribe such a charge. Such charge shall be equal to the lesser
of four percent (4%) of the delinquent amount or the maximum amount which shall
be permitted by applicable state law, and shall be immediately due and payable,
and added to the principal balance, without notice or demand by Holder.
5. LOCATION OF PAYMENTS. Amounts due under this Note shall be paid in
lawful money of the United States of America to Holder at 0000 Xxxxx Xxxx, Xxxx
Xxxxxxx, Xxxxxxxxx 00000 or in such other name and to such other address as
Holder may from time to time designate in writing.
6. EVENTS OF DEFAULT; ACCELERATION. Upon the occurrence of an Event of
Default, this Note shall, at the election of Holder, become immediately due and
payable in full. Lender shall provide notice of such election to Borrower
except in the case of a bankruptcy proceeding of any Obligor.
7. WAIVERS BY BORROWER. Except as set forth in this Note, the Loan
Agreement or any of the Security Documents, Borrower hereby waives presentment,
demand for payment, notice of dishonor and any or all other notices or demands
in connection with the delivery, acceptance, performance, default, or
enforcement of this Note and hereby consents to and waives any defense relating
to (i) any extensions of time, renewals, discharges, releases, or other
indulgences which may be granted to any party to this Note, (ii) release,
substitution, addition or modification of the Loan Agreement or any Security
Document or any Obligor, and (iii) waivers, modifications, releases or other
indulgences that may be granted or consented to by Holder in respect of the time
of payment or any other provisions of this Note, the Loan Agreement or any of
the Security Documents.
8. ENFORCEMENT COSTS. If, and as often as, the Holder shall take any
action (whether or not involving commencement of legal proceedings) for the
defense or enforcement of Holder's rights under this Note, the Loan Agreement or
any Security Document, including
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without limitation the collection of the moneys due on this Note, there shall be
immediately due from Borrower, in addition to the unpaid principal and interest,
all costs and expenses of such action, including reasonable attorney's fees,
which costs and expenses shall be due when incurred by Holder and shall be added
to the principal balance of this Note as of the date so incurred, provided that
the amount so added to the principal balance shall, when taken together with the
then existing principal balance, not exceed $1,765,000.
9. NO WAIVER BY HOLDER. No delay or omission on the part of Holder in
exercising any right under this Note, the Loan Agreement or any Security
Document shall operate as a waiver or release of any such right or of any other
right under this Note, the Loan Agreement or any Security Document. No waiver,
release or amendment by Holder shall be effective unless made in a written
document signed by Holder. No waiver by Holder of any right in a particular
instance shall operate as a waiver of such right in a separate or later
instance. All amounts required to be paid by the terms of this Note, the Loan
Agreement and any Security Document shall be paid without set-off, recoupment or
abatement of any kind. The rights and remedies of Holder under this Note, the
Loan Agreement and any Security Document shall be cumulative and shall not limit
other rights or remedies available at law or in equity, and such rights and
remedies may be exercised by Holder singularly or in any combination or order,
at the option of Holder.
10. NO USURY. This Note, the Loan Agreement and the Security Documents
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to the Holder
for the use, forbearance, loaning or detention of the indebtedness evidenced
hereby exceed the maximum permissible under applicable law. If from any
circumstances whatsoever, fulfillment of any provisions hereof shall involve
exceeding the maximum interest rate applicable by law to this Note, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
law; and, if from any circumstances, Holder should ever receive, purportedly as
interest, an amount which would exceed the highest lawful rate applicable to
this Note, such amount which would be in excess of such highest lawful rate
shall be applied to the reduction of the principal balance evidenced hereby and
not to the payment of interest. This provision shall control every other
provision of this Note, the Loan Agreement and the Security Documents and shall
also be binding upon and available to any subsequent holder or endorsee of this
Note.
11. CONVERSION RIGHT.
(a) At any time during which an Event of Default shall have occurred
and be continuing or at any time on or after the date two (2) years from
the date of this Note, Holder shall have the right to require LMT to
convert up to $1,000,000.00 of the outstanding indebtedness evidenced by
this Note (the "CONVERSION RIGHT") into shares of Common Stock of LMT, par
value $.01 per share ("COMMON STOCK") (shares of Common Stock issuable upon
exercise of the Conversion Right are referred to as the "CONVERSION
SHARES") as provided for in this Section.
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(b) Upon exercise of the Conversion Right, LMT shall deliver to Holder
that number of shares of Common Stock equal to the quotient obtained by
dividing (x) the amount of indebtedness evidenced by this Note, which
Holder elects to convert, as specified in the Conversion Notice (as
hereinafter defined), by (y) the Conversion Price (as hereinafter defined).
(c) The Conversion Right may be exercised by Holder on any business
day by delivering a written notice of conversion (the "CONVERSION NOTICE")
to LMT specifying the total amount of indebtedness evidenced by this Note
(up to $1,000,000.00) with respect to which Holder is exercising the
Conversion Right.
(d) The "Conversion Price" shall be equal to the lesser of $5.875 per
share of Common Stock (the "INITIAL CONVERSION PRICE") or the Fair Market
Value of a share of Common Stock as of the date of the Conversion Notice.
For such purposes, the "Fair Market Value" per share of Common Stock shall
mean:
(i) If the Common Stock is traded on an exchange or is quoted on
NASDAQ National Market, then the average closing or last sale prices,
respectively, reported for the ten (10) business days immediately
preceding the date of the Conversion Notice, and
(ii) If the Common Stock is not traded on an exchange or on NASDAQ
National Market but is traded on the over-the-counter market, then the
average closing bid and asked prices reported for the ten (10)
business days immediately preceding the date of the Conversion Notice.
(e) Upon receipt by Holder of the Conversion Shares, as herein
provided, the amount of indebtedness evidenced by this Note shall
automatically be reduced by the amount of the indebtedness set forth in the
Conversion Notice and such reduced amount shall be deemed paid in full.
(f) Notwithstanding the foregoing, the Conversion Right shall lapse
and be of no further force and effect in the event that prior to its
exercise all amounts evidenced by this Note have been indefeasibly paid in
full.
12. CONVERSION SHARE CERTIFICATE. Upon exercise of the Conversion Right,
Holder shall be deemed to be the holder of record of the Conversion Shares
issuable upon such exercise, notwithstanding that the transfer books of LMT
shall then be closed or certificates representing such Conversion Shares shall
not then have been actually delivered to Holder. As soon as practicable after
such exercise of the Conversion Right, LMT shall issue and deliver to Holder a
certificate or certificates for the Conversion Shares issuable upon such
exercise, registered in the name of Holder or its designee.
13. RESTRICTIONS ON TRANSFER.
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(a) This Note may only be assigned as provided in the Loan Agreement.
In addition, the Conversion Right may not be sold, transferred,
hypothecated or otherwise assigned except (1) to persons who are related by
blood or marriage to Xxxxxx Xxxxxxx, (2) to entities or persons which are
affiliates of, related to, or controlled by Xxxxxx Xxxxxxx or TimeMasters,
Inc. or (3) in connection with any bona fide pledge by any person or entity
who is a permitted transferee, as described in clause (1) or (2) above, or
otherwise. LMT shall be entitled to treat the registered holder of the
Conversion Right as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in
such Conversion Right on the part of any other person, and shall not be
liable for any registration or transfer of the Conversion Right which is
registered or to be registered in the name of a fiduciary or the nominee of
a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with the knowledge of such facts that its participation
therein amounts to bad faith. The Conversion Right shall be transferable
only on the books of LMT upon delivery thereof duly endorsed by Holder or
by its duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment, or authority to transfer. In all cases
of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his or its authority
shall be produced. Notwithstanding the foregoing, LMT shall have no
obligation to cause the Conversion Right to be transferred on its books to
any person if, in the opinion of counsel to LMT, such transfer does not
comply with the provisions of the Securities Act of 1933, as amended (the
"ACT"), and the rules and regulations thereunder.
(b) Holder acknowledges that it has been advised by LMT that neither
this Note nor the Conversion Shares have been registered under the Act,
that this Note is being or has been issued and the Conversion Shares may be
issued on the basis of the statutory exemption provided by Section 4(2) of
the Act or Regulation D promulgated thereunder, or both, relating to
transactions by an issuer not involving any public offering. Holder
acknowledges that it has been informed by LMT of, or is otherwise familiar
with, the nature of the limitations imposed by the Act and the rules and
regulations thereunder on the transfer of securities. In particular, Holder
agrees that no sale, assignment or transfer of this Note or the Conversion
Shares issuable upon exercise of the Conversion Right shall be valid or
effective, and LMT shall not be required to give any effect to any such
sale, assignment or transfer, unless (i) the sale, assignment or transfer
of this Note or such Conversion Shares is registered under the Act, it
being understood that neither this Note nor such Conversion Shares are
currently registered for sale and that LMT has no obligation or intention
to so register this Note or such Conversion Shares except as specifically
provided herein, or (ii) this Note or such Conversion Shares are sold,
assigned or transferred in accordance with all the requirements and
limitations of Rule 144 under the Act, or (iii) such sale, assignment, or
transfer is otherwise exempt from registration under the Act.
14. RESERVATION OF SHARES. LMT shall at all times reserve and keep
available from its authorized and unissued Common Stock, solely for the purpose
of providing for the exercise of the rights to purchase all Conversion Shares
granted pursuant to the Conversion Right, such
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number of shares of Common Stock as shall, from time to time, be sufficient
therefor. LMT covenants that all shares of Common Stock issuable upon exercise
of this Conversion Right pursuant to exercise of the Conversion Right, shall be
validly issued, fully paid, nonassessable, and free of preemptive rights.
15. ADJUSTMENTS. The Conversion Price shall be subject to adjustment from
time to time as hereinafter provided in this Section 15.
(a) If LMT 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 Initial
Conversion 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 share of Common Stock.
(b) If any capital reorganization or reclassification of the capital
stock of LMT, or consolidation or merger of LMT 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 Common Stock
shall be entitled to receive stock, securities or assets with respect to or
in exchange for such Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, Holder
shall have the right to receive upon the basis and upon the terms and
conditions specified in this Note and in lieu of the Conversion Shares
immediately theretofore 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 Note if it had
exercised the Conversion Right and had received such shares of Common Stock
prior to such reorganization, reclassification, consolidation, merger or
sale. LMT shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
LMT) 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 Note at the last address of such
holder appearing on the books of LMT, 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.
(c) If LMT takes any other action, or if any other event occurs, which
should result in an adjustment in the number of Conversion Shares subject
to the Conversion Right in order to fairly protect the rights of Holder, an
appropriate adjustment shall be made by LMT.
(d) Upon each adjustment, Holder shall thereafter be entitled to
receive from such adjustment, the number of shares obtained by multiplying
the Fair Market Value 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 Fair Market Value
resulting from such adjustment.
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(e) Upon any adjustment, LMT shall give written notice thereof, by
first class mail, postage prepaid, addressed to Holder at the address of
such Holder as shown on the books of LMT, which notice shall state the
nature of and reason for the adjustment and the increase or decrease, if
any, in the number of Conversion Shares or the Fair Market Value, setting
forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
16. TAXES. The issuance of any shares or other securities upon the
exercise of the Conversion Right, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made without
charge to Holder for any tax or other charge in respect of such issuance. LMT
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of Holder and LMT shall not be required to issue or deliver any
such certificate unless and until the person or persons requesting the issue
thereof shall have paid to LMT the amount of such tax or shall have established
to the satisfaction of LMT that such tax has been paid.
17. REGISTRATION RIGHTS REGARDING CONVERSION SHARES.
(a) If, at any time on and after the date the Conversion Right has
been exercised by Holder, as herein provided, and continuing until two
years following such date (the "REGISTRATION PERIOD"), LMT shall file a
registration statement (other than on Form X-0, Xxxx X-0, or any successor
form) with the Securities and Exchange Commission (the "COMMISSION"), LMT
shall give all the then holders of the Conversion Shares (the "ELIGIBLE
HOLDERS") at least 20 days prior written notice of the filing of such
registration statement. If requested by any Eligible Holder in writing
within 15 days after receipt of any such notice, LMT shall, at LMT's sole
expense (other than the SEC filing fees with respect to the securities of
the Eligible Holder and the fees and disbursements of counsel and any
accountants for the Eligible Holder and the underwriting discounts, if any,
payable in respect of the securities sold by any Eligible Holder), cause
all such shares of Common Stock that are acquired by Eligible Holder upon
the exercise of the Conversion Right and with respect to which Eligible
Holder has requested registration, to be included in such registration
statement, all to the extent requisite to permit the sale or other
disposition by such Eligible Holder of the shares to be so registered;
provided, however, that nothing herein shall prevent LMT from, at any time,
abandoning or delaying any such registration initiated by it; provided
further, that LMT shall not be required to include in any such registration
statement any Conversion Shares of an Eligible Holder if all such
Conversion Shares could be sold by such Eligible Holder under Rule 144 in a
three month period. If any such registration shall be underwritten in whole
or in part, LMT may require that the shares requested for inclusion by
Eligible Holders pursuant to this Section be included in the underwriting
on the same terms and conditions as the securities otherwise being sold
through the underwriters. In the event that in the good faith judgment of
the managing underwriter of such public offering the inclusion of all of
the shares originally covered by a request for registration made by
Eligible Holders would reduce the number of shares to be offered by LMT or
interfere with the successful marketing of the shares of stock offered by
LMT, the number of shares owned by Eligible Holders and otherwise to be
included in the underwritten public
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offering may be reduced; provided, however, that such reduction shall be
made among all other persons (other than LMT and the holders of "Warrant
Shares" under the Warrant) who are participating in such offering before
reduction is made in the shares proposed to be included by the Eligible
Holders.
(b) If, at any time, during the Registration Period, but on two
occasions only, LMT shall receive a written request, from Eligible Holders
who in the aggregate own a majority of the total number of Conversion
Shares ("MAJORITY HOLDERS") to register the sale of all or part of such
Conversion Shares, LMT shall, as promptly as practicable, prepare and file
with the Commission a registration statement sufficient to permit the
public offering and sale of the Conversion Shares through the facilities of
all appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and
counsel to cause such registration statement to become effective as
promptly as practicable; and LMT shall be obligated to pay all expenses
incurred in connection with such registration (other than SEC filing fees
with respect to the securities of the Eligible Holders and the fees and
disbursements of counsel for the Eligible Holders and underwriting
discounts, if any, payable in respect of the Conversion Shares sold by the
Eligible Holders). LMT shall not be obligated to effect any registration of
its securities pursuant to this Section 17(b) (i) within six months after
the effective date of a previous registration statement prepared and filed
in accordance with Sections 17(a) (in which Conversion Shares could have
been included) or 17(b), (ii) with respect to any Conversion Shares of an
Eligible Holder if all such Conversion Shares could be sold by such
Eligible Holder under Rule 144 during a three-month period, or (iii) at any
time during which, in the reasonable judgment of the Board of Directors of
LMT, such filing would interfere with a transaction then contemplated by
LMT; provided, however, that LMT shall not be able to delay filing of such
registration statement pursuant to clause (iii) for a period exceeding one
hundred ten (110) days. Within ten business days after receiving any
request contemplated by this Section 17(b), LMT shall give written notice
to all the other Eligible Holders, advising each of them that LMT is
proceeding with such registration and offering to include therein all or
any portion of any such other Eligible Holder's registrable securities,
provided that LMT receives a written request to do so from such Eligible
Holder within 30 days after receipt by him or it of LMT's notice.
(c) In the event of a registration pursuant to the provisions of this
Section 17, LMT shall use its best efforts to cause the Eligible Holders'
Conversion Shares so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as Holder or
such Eligible Holders may reasonably request; provided, however, that LMT
shall not by reason of this Section 17(c) be required to qualify to do
business in any state in which it is not otherwise required to qualify to
do business or to file a general consent to service process.
(d) LMT shall keep effective any registration or qualification
contemplated by this Section 17 and shall from time to time amend or
supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period
of time as shall be required to permit the Eligible
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Holders to complete the offer and sale of the Conversion Shares covered
thereby or until the date on which all Conversion Shares can be sold
pursuant to Rule 144 under the Act in a period of three months.
(e) In the event of a registration pursuant to the provisions of this
Section 17, LMT shall furnish to each Eligible Holder such number of copies
of the registration statement and of each amendment and supplement thereto
(in each case, including all exhibits), such reasonable number of copies of
each prospectus contained in such registration statement and each
supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible Holder
may reasonably request to facilitate the disposition of the Conversion
Shares included in such registration.
(f) In the event of a registration pursuant to the provisions this
Section 17, LMT shall furnish each Eligible Holder of any Conversion Shares
so registered with an opinion of its counsel (reasonably acceptable to the
Eligible Holders) to the effect that (i) the registration statement has
become effective under the Act and no order suspending the effectiveness of
the registration statement, preventing or suspending the use of the
registration statement, any preliminary prospectus, any final prospectus,
or any amendment or supplement thereto has been issued, nor to the best
knowledge of such counsel has the Commission or any securities or blue sky
authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) each document, if any,
incorporated by reference in the registration statement and the prospectus
included therein (except for financial statements and related schedules, as
to which such counsel need express no opinion) complied as to form when
filed with the Commission in all material respects with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder, (iii) the registration statement
and the prospectus included therein and any supplements or amendments
thereto (except for financial statements and related schedules, as to which
such counsel need express no opinion) comply as to form in all material
respects with the Act and the rules and regulations of the Commission
thereunder, and (iv) such counsel believes that (except for financial
statements and related schedules, as to which such counsel need express no
belief) such registration statement and the prospectus included therein at
the time such registration statement became effective did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
and the prospectus, as amended or supplemented, if applicable, does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Such opinion
shall also state the jurisdictions in which the Conversion Shares have been
registered or qualified for sale pursuant to the provisions of this Section
17. LMT shall also furnish to each Eligible Holder a cold comfort letter
from the independent certified public accountants of LMT in customary form
and substance if
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such cold comfort letter is to be provided to any other person in
connection with the registration.
(g) In the event of a registration pursuant to the provision of this
Section 17, LMT and the Eligible Holders shall enter into a cross-indemnity
agreement and a contribution agreement, each in customary form, with each
underwriter, if any, and, if requested, enter into an underwriting
agreement containing conventional representations, warranties, allocation
of expenses, and customary closing conditions, including, without
limitation, opinions of counsel and accountants' cold comfort letters, with
any underwriter who acquires any Conversion Shares.
(h) LMT agrees that, after the completion of such public offering and
until all the Conversion Shares have been sold under a registration
statement or pursuant to Rule 144 under the Act, it shall keep current in
filing all reports, statements and other materials required to be filed
with the Commission to permit holders of the Conversion Shares to sell such
securities under Rule 144.
18. INDEMNIFICATION REGARDING REGISTRATION OF CONVERSION SHARES.
(a) Subject to the conditions set forth below, LMT agrees to indemnify
and hold harmless each Eligible Holder, its officers, directors, partners,
trustees, employees, agents, and counsel, and each person, if any, who
controls any such person within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, from and against any and all loss,
liability, charge, claim, damage, and expense whatsoever (which shall
include, for all purposes of this Section 18(a), without limitation,
attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), as and when incurred, arising out
of, based upon, or in connection with (A) any untrue statement or alleged
untrue statement of a material fact contained (i) in any registration
statement, preliminary prospectus, or final prospectus (as from time to
time amended and supplemented), or any amendment or supplement thereto,
relating to the sale of any of the Conversion Shares, or (ii) in any
application or other document or communication (in this Section 18
collectively called an "application") executed by or on behalf of LMT or
based upon written information furnished by or on behalf of LMT filed in
any jurisdiction in order to register or qualify any of the Conversion
Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities exchange; or (B) any omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with
written information furnished to LMT with respect to such Eligible Holder
by or on behalf of such person expressly for inclusion in any registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. The
foregoing agreement to indemnify shall be in addition to any liability LMT
may otherwise have, including liabilities arising under this Note, the Loan
Agreement and the Security Documents.
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(b) Eligible Holders agree to indemnify and hold harmless LMT and any
underwriter, and each of their respective officers, directors, partners,
trustees, employees, agents and counsel, and each person who controls any
such person within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, from and against any and all loss, damage, liability,
cost or expense whatsoever (which shall include, for all purposes of this
Section 18(b), without limitation, attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing, or defending against
litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) as and when
incurred, arising out of, based upon, or in connection with (A) any untrue
or alleged untrue statement of any material fact contained in (i) any
registration statement, any prospectus contained therein or any amendment
or supplement thereto relating to sale of the Conversion Shares, or (ii) in
any application; or (B) arising out of, or based upon the omission or the
alleged omission to state in any such registration statement, prospectus or
application a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in strict conformity
with written information furnished by Eligible Holders.
19. LEGEND. Unless registered pursuant to the provisions of Section 17
hereof, the Conversion Shares issued upon exercise of the Conversion Right shall
be subject to a stop transfer order and the certificate or certificates
evidencing such Conversion Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
MAYBE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS."
20. NO SHAREHOLDER RIGHTS. Holder shall not have solely on account of the
Conversion Right, any rights of a shareholder of LMT, either at law or in
equity, or to any notice of meetings of shareholders or of any other proceedings
of LMT, except as provided in this Note, the Loan Agreement or the Security
Documents.
21. GOVERNING LAW. This Note has been negotiated and consummated in the
State of Minnesota and shall be construed in accordance with the laws of the
State of Minnesota applicable to contracts made and performed within such State,
without regard to principles
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governing conflicts of law.
22. JURISDICTION. Borrower and LMT irrevocably consent to the
jurisdiction of the courts of the State of Minnesota and of any federal court
located in such State in connection with any action or proceeding arising out of
or relating to this Note, any document or instrument delivered pursuant to, in
connection with or simultaneously with this Note, or a breach of this Note or
any such document or instrument.
23. MISCELLANEOUS. This Note may not be modified orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. Time is of the essence
hereof.
24. ORIGINAL NOTE RENEWAL. This Note has been executed and delivered as a
renewal of the Original Note in accordance with the terms and conditions of an
endorsement affixed to the Original Note.
LASERMASTER CORPORATION,
a Minnesota corporation
By /s/ Xxxxxx X. Xxxxxx
-------------------------
Its President
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CONSENT OF LMT
--------------
The undersigned consents and agrees to be bound to the provisions of
Sections 11 through 24 of the foregoing Note as of the date first above written.
The undersigned has executed and delivered to Lender a Guaranty of even date
herewith by which the undersigned has guaranteed the "Obligations," as such term
is defined in such Guaranty, and by reason of its signature below, the
undersigned shall not be, and shall not deemed, a co-maker, acknowledgement
party, or endorser of the foregoing Note.
LASERMASTER TECHNOLOGIES, INC.,
a Minnesota corporation
By /s/ Xxxxxx X. Xxxxxx
---------------------------
Its COO
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