SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and entered into
as of this 14th day of September, 1998, by and among Helisys, Inc., (the
"Company"), a Delaware corporation, the Shareholders listed on Schedule I
hereto, Xxxxxx X. Xxxxxxxxxx III ("Xxxxxxxxxx"), and Xxxxxxx Xxxxxx
("Xxxxxx").
W I T N E S S E T H:
WHEREAS, the Shareholders listed on Schedule I hereto (each a "Shareholder"
and collectively the "Shareholders") have agreed to purchase from the Company
shares (the "Shares") of Preferred Stock and Warrants (as hereinafter defined)
pursuant to a certain Series A Preferred Stock Package Agreement of even date
herewith (the "Purchase Agreement");
WHEREAS, Cruttenden is an existing holder of Preferred Stock, and Xxxxxx is
a founder of the Company and the holder of a majority of the Company's Common
Stock and each will benefit from the Shareholders' investment in the Company;
WHEREAS, the Shareholders, Cruttenden, Xxxxxx and the Company have agreed
to enter into an agreement with respect to (i) the procedures to be followed in
connection with the election of the Company's Board of Directors and (ii)
certain restrictions upon the issuance by the Company of New Securities; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, and to induce the Purchasers to
purchase the Shares and Warrants, and in consideration thereof, it is hereby
covenanted and agreed as follows:
SECTION L
DEFINITIONS
As used herein, the following terms shall have the respective meanings
following such term:
AFFILIATE shall mean, as to any Shareholder, (i) the partners, retired
partners, directors and officers, as the case may be, of such Shareholder,
(ii) the partners of any of the parties referred to in the foregoing clause
of this definition, (iii) the spouse or lineal descendants of such
Shareholder or any of the parties referred to in the foregoing clauses of
this definition, (iv) a trust for the benefit of such Shareholder or any of
the parties referred to in the foregoing clauses of this definition, (v) any
corporation or partnership controlled by such Shareholder or by any of the
parties referred to in the foregoing clauses of this definition, and (vi) any
other party that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, any Shareholder.
CERTIFICATE OF INCORPORATION shall mean the Company's Amended and Restated
Certificate of Incorporation, as amended from time to time.
COMMON STOCK shall mean the Company's common stock, par value $.001.
CONVERSION SHARES shall mean, at any time, (i) the issued and outstanding
shares of Preferred Stock (for purposes of calculating the number of Conversion
Shares at any time, each such share shall be deemed to be that number of shares
of Common Stock or other securities into which such share is then convertible),
(ii) the shares of Common Stock issued upon conversion of the issued and
outstanding shares of Preferred Stock owned as of the date hereof by the
Shareholders and (iii) any securities issued or issuable directly or indirectly
in respect of the aforesaid shares of Common Stock or Preferred Stock, or both,
in payment of a dividend or in connection with a stock split, recapitalization
or other similar event.
EQUITY SECURITY shall mean any capital stock (including the Common and
Preferred Stock) of the Company, whether now authorized or not, and rights,
options, warrants or rights to purchase capital stock, and securities of any
type whatsoever that are, or may become, convertible into capital stock; the
number of shares of an Equity Security which is an option, warrant, right or
convertible security shall be the number of shares of such Equity Security which
would result upon the immediate exercise of such option, warrant or right of
conversion of such convertible security, without regard to when such option,
warrant or right may in fact be exercised or such convertible security may in
fact be converted.
NEW SECURITIES shall mean any Equity Securities hereafter issued; provided,
however, that such term shall not include (i) securities purchased under the
Purchase Agreement; (ii) securities offered to the public pursuant to a
registration statement filed in accordance with the provisions of the Securities
Act; (iii) securities issued in connection with the acquisition of another
corporation by the Company by merger, purchase of substantially all assets or
other reorganization whereby the Company owns, upon consummation of such
acquisition, greater than fifty percent (50%) of the voting power to elect the
directors of such corporation; (iv) securities issued in any merger or
consolidation of the Company, provided that such merger or consolidation is
approved by the holders of not less than seventy-five percent (75%) of the
Conversion Shares; (v) securities evidencing any borrowings, direct or indirect,
from financial institutions or other persons by the Company, whether or not
presently authorized, including any type of loan or payment evidenced by any
type of debt instrument, provided such securities do not have equity features
(such as warrants, options or other rights to purchase capital stock) and are
not convertible into capital stock of the Company; (vi) securities issued
pursuant to any stock option plan, stock purchase or stock bonus arrangement, or
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grant; and (vii) securities issued to financial institutions and leasing
companies in connection with borrowing or lease financing arrangements of the
Company, provided that such issuances or grants are unanimously approved by the
Board of Directors.
PREEMPTIVE SHARE shall mean, immediately prior to any issue of New
Securities, and as to each Shareholder, the percentage which expresses the ratio
between (i) the number of Equity Securities owned at such time by such
Shareholder, and (ii) the aggregate number of Equity Securities outstanding at
such time.
PREFERRED STOCK shall mean the Company's Series A Preferred Stock, par
value $.001 per share.
PURCHASE AGREEMENT shall mean the Series A Preferred Stock Purchase
Agreement, dated as of the date hereof, among the Company and the Purchasers,
including any supplemental agreements executed in accordance with Section 2.2 of
the Purchase Agreement..
SECURITIES ACT shall mean the Securities Act of l933, as amended, and any
successor statute thereto.
SELL, as to any Equity Security, shall mean to sell, or in any other way
directly or indirectly transfer, assign, distribute, encumber or otherwise
dispose of such Equity Security, either voluntarily or involuntarily.
SHAREHOLDERS shall mean the persons listed on Schedule I hereto and shall
include any other party who agrees in writing with the parties hereto to be
bound by and to comply with all applicable provisions of this Agreement.
WARRANTS shall mean the Warrants to purchase up to an aggregate of 900,000
shares of Common Stock, $.001 par value per share, of the Company, issued
pursuant to the Purchase Agreement.
SECTION 2
ELECTION OF DIRECTORS
SECTION 2.1. DESIGNATION OF NOMINEES.
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(a) So long as a Shareholder named below shall continue to hold (with any
members of its Shareholder) no less than thirty-five (35%) of the shares of
Preferred Stock originally acquired by it, such Shareholder shall be entitled,
but shall be under no obligation, to designate one nominee for election to the
Board of Directors by the Shareholders:
Telantis Venture Partners V, Inc.
(b) In the event a designation is not made by Telantis Venture Partners V,
Inc. in accordance with this Section 2.1, unless otherwise agreed by such
Shareholder, the Shareholders will use their best efforts to ensure that such
position on the Board of Directors shall be left vacant until a nominee is so
designated.
SECTION 2.2. VOTING FOR NOMINEES. Each Shareholder and Cruttenden agrees
to vote the Equity Securities held by it from time to time for the nominees so
designated in accordance with Section 2.1 at each annual meeting of shareholders
of the Company, and at any special meeting of shareholders of the Company called
for the election of directors, in such manner as may be required to elect such
nominees. Cruttenden agrees to vote in accordance with the majority vote of the
Shareholders with respect to the election for any position on the Board of
Directors.
SECTION 2.3. OBLIGATIONS OF COMPANY AND XXXXXX. The Company agrees to use
its best efforts to cause the nominees so designated in accordance with Section
2.1 to be included in part of the slate of directors and to be recommended to,
and elected by shareholders, at each annual meeting of shareholders of the
Company, and at any special meeting of shareholders of the Company called for
the election of directors. In the event of exchange of Series A Preferred Stock
for Exchange Notes (as defined in the Purchase Agreement) in accordance with
Section 7.17 of the Purchase Agreement, the Company agrees to the foregoing on
the same basis as if such exchange had not occurred. Xxxxxx agrees to vote the
shares of Equity Securities held by or controlled by him in favor of the
designee (if the Shareholders are entitled to elect one director) or designees
(if the Shareholders are entitled to elect more than one director) of the
Shareholders.
SECTION 2.4. REMOVAL; ELECTION OF SUCCESSORS. If (a) the Company receives
a written notice that Shareholders holding a majority of the voting power of the
Equity Securities held by the Shareholders wish to remove a director elected
pursuant to Section 2.1, or (b) such director shall have resigned or shall be
unable to serve, then, in any such case, the Company and the Shareholders agree
to take such action as may be necessary to call a special meeting of the
stockholders of the Company for the purpose of effecting any such removal or
filling such vacancy, as the case may be, and at such meeting each Shareholder
shall vote to accomplish said result.
SECTION 2.5. PROXY. If any Shareholder shall refuse to vote the Equity
Securities held by it as provided in any of the foregoing Sections of this
Section 2 at any meeting of shareholders of the
4
Company, or shall refuse to give its written consent in lieu of a meeting,
thereupon, without further action by such Shareholder, the President or any
Vice President of the Company shall be, and hereby is, irrevocably
constituted the attorney-in-fact and proxy of such Shareholder for the
purpose of voting, and shall vote such shares at such meeting as provided in
the foregoing Sections of this Section 2 or give such consent, as the case
may be.
SECTION 3
SALE OF NEW SECURITIES BY THE COMPANY
Except as otherwise expressly provided herein, the Company hereby agrees
that it shall not Sell any New Securities except in accordance with the
following procedures:
(a) The Company shall first deliver to each Shareholder a written Notice
of Intention To Sell, which shall be irrevocable for a period of twenty (20)
days after delivery thereof, offering to each Shareholder the right to purchase
up to its Preemptive Share of such New Securities at the purchase price and on
the terms specified therein. Each Shareholder shall have the right and option,
for a period of thirty (30) days after delivery to Shareholders of such Notice
of Intention To Sell, to purchase all or any part of the New Securities so
offered at the purchase price and on the terms stated therein. Such acceptance
shall be made by delivering a written Notice of Acceptance to the Company within
the aforesaid thirty (30) day period.
(b) If any Shareholder shall fail to accept, or shall reject in writing,
the offer made pursuant to Section 3(a), then, upon the earlier of the
expiration of the aforesaid thirty (30) day period or the receipt of Notices of
Acceptance, or written rejections of such offer, from all Shareholders, the then
remaining New Securities formerly subject to such offer shall be reoffered to
all other Shareholders, if any, which shall have accepted their Preemptive Share
of such original offer. Such subsequent offer shall be on the terms and subject
to acceptance in the manner provided in Section 3(a), except that the
Shareholders receiving such subsequent offer shall have (i) the right and option
to accept such offer with respect to all of the then remaining New Securities
subject thereto PRO RATA in accordance with their respective Preemptive Shares,
for a period of seven (7) business days, and (ii) the further right and option
to offer, in any Notice of Acceptance, to purchase any of such New Securities
not purchased by other Shareholders, in which case such New Securities not
accepted by other Shareholders shall be deemed to have been offered to and
accepted by the Shareholders which have exercised their option under this clause
(ii), PRO RATA, in accordance with their respective Preemptive Shares, and on
the above-described terms and conditions.
(c) The closing of any sales of New Securities under the terms of Section
3(a) shall be made at the offices of the Company on a mutually satisfactory
business day within fourteen (14) days after
5
the expiration of the aforesaid periods. Delivery of certificates or other
instruments evidencing such New Securities duly endorsed for transfer to the
Shareholders shall be made on such date against payment of the purchase price
therefor.
(d) If effective acceptance shall not be received pursuant to Section 3(a)
above with respect to all New Securities offered for sale pursuant to a Notice
of Intention To Sell, then the Company may sell all or any part of the remaining
New Securities so offered for sale at a price not less than the price, and on
terms not more favorable to the purchaser thereof than the terms stated in the
original Notice of Intention To Sell, at any time within one hundred twenty
(l20) days after the expiration of the offer required by Section 3(a) above. In
the event the remaining New Securities are not sold by the Company during such
one hundred twenty (l20) day period, the right of the Company to sell such
remaining New Securities shall expire and the obligations of this Section 3
shall be reinstated; provided, however, that in the event the Company
determines, at any time during such one hundred twenty (l20) day period, that
the sale of all or any part of the remaining New Securities on the terms set
forth in the Notice of Intention To Sell is impractical, the Company can
terminate the offer and reinstate the procedure provided in this Section 3
without waiting for the expiration of such one hundred twenty (l20) day period.
SECTION 4
TRANSFER OF SHARES; COVENANTS OF THE COMPANY
SECTION 4.L. TRANSFER BY SHAREHOLDERS. No Shareholder shall sell, assign,
transfer, pledge, encumber or otherwise dispose of, whether by operation of law
or otherwise, any Equity Securities unless any such transfer is made to a
transferee who concurrently is or prior to such transfer becomes a party to this
Agreement.
SECTION 4.2. REGISTRATION OF TRANSFER. The Company shall permit
registration of transfer of Equity Securities held by a Shareholder only in
accordance with the terms of this Agreement. Any transfer of Equity Securities
which is made in any manner contrary to the provisions of this Agreement shall
be void and shall not be effective to constitute the transferee as a shareholder
of the Company entitled to any rights, benefits, and privileges as such.
SECTION 4.3. LEGEND. Each certificate of Common Stock or Preferred
Stock and certificates representing other Equity Securities of the Company, held
by a Shareholder, shall be stamped or otherwise have endorsed or imprinted
thereon a legend in substantially the following form:
6
"The transfer of the shares represented by this certificate, and the
rights of the holder hereof, are subject to the terms and conditions of a
Shareholders' Agreement, dated as of September 14, 1998 (a copy of which is
on file with the Company), as the same may be amended from time to time, and
no transfer of the shares represented hereby or of shares issued in exchange
therefor shall be valid or effective unless the terms and conditions of such
Agreement have been fulfilled."
SECTION 4.4. "MARKET STAND-OFF" AGREEMENT. Xxxxxx agrees that he shall
not Sell any Equity Security at any time owned by him or of which he is at
any time the "Beneficial Owner," as that term is defined in Rule 13d-3 of the
Rules and Regulations under the Securities Exchange Act of 1934, except in
accordance with the volume limitations applicable to "affiliates" of the
Company as set forth in Rule 144 of the Rules and Regulations under the
Securities Act of 1933, regardless of whether Xxxxxx falls within the meaning
of "affiliate" under said Rule 144. Additionally, during the twelve-month
period commencing as of the date hereof, Xxxxxx may only sell shares with an
aggregate sale price of up to $100,000 provided that: (i) the price per
share in any transaction is not less than $1.00; (ii) such sale is otherwise
in compliance with all federal and state securities laws and regulations; and
(iii) Xxxxxx has first offered to sell such shares to the Shareholders in
accordance with Section 4.5. Notwithstanding the foregoing, at any time
Xxxxxx is not an employee of the Company, he may only sell any Equity
Security with the consent of the majority in interest of the Shareholders.
SECTION 4.5. RIGHT OF FIRST OFFER. Xxxxxx hereby agrees that he shall
not Sell any Equity Security except in accordance with Section 4.4 and with
the following procedures
(a) Xxxxxx shall first deliver to each Shareholder a written Notice of
Intention To Sell, which shall be irrevocable for a period of twenty (20) days
after delivery thereof, offering to each Shareholder the right to purchase up
to its Preemptive Share of the shares proposed to be sold (the "Xxxxxx Sale
Shares") at the purchase price and on the terms specified therein. Each
Shareholder shall have the right and option, for a period of thirty (30) days
after delivery to Shareholders of such Notice of Intention To Sell, to
purchase all or any part of the Xxxxxx Sale Shares so offered at the purchase
price and on the terms stated therein. Such acceptance shall be made by
delivering a written Notice of Acceptance to Xxxxxx within the aforesaid
thirty (30) day period.
(b) If any Shareholder shall fail to accept, or shall reject in
writing, the offer made pursuant to Section 4.5(a), then, upon the earlier of
the expiration of the aforesaid thirty (30) day period or the receipt of
Notices of Acceptance, or written rejections of such offer, from all
Shareholders, the then remaining Xxxxxx Sale Shares formerly subject to such
offer shall be reoffered to all other Shareholders, if any, which shall have
accepted their Preemptive Share of such original offer. Such subsequent
offer shall be on the terms and subject to acceptance in the manner provided
in Section 4.5(a), except that the Shareholders receiving such subsequent
offer shall have (i) the right and option to accept such offer with respect
to all of the then remaining Xxxxxx Sale Shares subject thereto PRO RATA in
accordance with their respective Preemptive Shares, for a period of seven
(7) business days,
7
and (ii) the further right and option to offer, in any Notice of Acceptance,
to purchase any of such Xxxxxx Sale Shares not purchased by other
Shareholders, in which case such Xxxxxx Sale Shares not accepted by other
Shareholders shall be deemed to have been offered to and accepted by the
Shareholders which have exercised their option under this clause (ii), PRO
RATA, in accordance with their respective Preemptive Shares, and on the
above-described terms and conditions.
(c) The closing of any sales of Xxxxxx Sale Shares under the terms of
Section 4.5(a) shall be made at the offices of the Company on a mutually
satisfactory business day within fourteen (14) days after the expiration of
the aforesaid periods. Delivery of certificates or other instruments
evidencing such Xxxxxx Sale Shares duly endorsed for transfer to the
Shareholders shall be made on such date against payment of the purchase price
therefor.
(d) If effective acceptance shall not be received pursuant to
Section 4(a) above with respect to all Xxxxxx Sale Shares offered for sale
pursuant to a Notice of Intention To Sell, then Xxxxxx may sell all or any
part of the remaining Xxxxxx Sale Shares so offered for sale at a price not
less than the price, and on terms not more favorable to the purchaser thereof
than the terms stated in the original Notice of Intention To Sell, at any
time within one hundred twenty (l20) days after the expiration of the offer
required by Section 4.5(a) above. In the event the remaining Xxxxxx Sale
Shares are not sold by Xxxxxx during such one hundred twenty (l20) day
period, the right of Xxxxxx to sell such remaining Xxxxxx Sale Shares shall
expire and the obligations of this Section 4.5 shall be reinstated; provided,
however, that in the event Xxxxxx determines, at any time during such one
hundred twenty (l20) day period, that the sale of all or any part of the
remaining Xxxxxx Sale Shares on the terms set forth in the Notice of
Intention To Sell is impractical, Xxxxxx can terminate the offer and
reinstate the procedure provided in this Section 4 without waiting for the
expiration of such one hundred twenty (l20) day period.
8
SECTION 5
DURATION
The provisions of this Agreement shall be of no further force or effect
(i) upon the closing of the first sale of Common Stock to the public pursuant
to a registration statement filed with, and declared effective by, the
Securities and Exchange Commission under the Securities Act, with gross
proceeds to the Company as seller of not less than twenty million dollars
($20,000,000) before deducting underwriting commissions, provided the sale
price to the public per share of Common Stock is not less than $3.00 per
share, or (ii) at such time as 75% of the Series A Preferred Stock
outstanding as of the date hereof and any Exchange Notes exchanged therefor
are no longer outstanding. In addition, the provisions of Section 2 of this
Agreement shall be of no further force or effect upon the date which is ten
(l0) years from the date hereof.
SECTION 6
MISCELLANEOUS PROVISIONS
SECTION 6.1. ASSIGNMENT OF RIGHTS. The provisions of this Agreement
shall be binding upon and inure to the benefit of any successor or assign of
any party hereto.
SECTION 6.2. DURATION OF AGREEMENT. Unless sooner terminated in
accordance with the provisions of this Agreement, the rights and obligations
of each Shareholder under this Agreement shall terminate as to such
Shareholder when the Shareholder has transferred all Equity Securities owned
by such Shareholder in accordance with this Agreement.
SECTION 6.3. ENFORCEMENT. The parties hereto agree that the remedy at
law for any breach of this Agreement is inadequate and that should any
dispute arise concerning any matter hereunder, this Agreement shall be
enforceable in a court of equity by an injunction or a decree of specific
performance. Such remedies shall, however, be cumulative and not exclusive,
and shall be in addition to any other remedies which the parties hereto may
have.
SECTION 6.4. SEVERABILITY OF PROVISIONS. If any one or more provisions
of this Agreement shall be declared invalid or unenforceable, the same shall
not affect the validity or enforceability of any other provisions of this
Agreement.
SECTION 6.5. AMENDMENTS. Neither this Agreement nor any term hereof
may be amended, waived, discharged, or terminated, except by written
instrument signed by the Company and Shareholders holding greater than
seventy-five percent (75%) of the voting Equity Securities held by
9
the Shareholders; PROVIDED, HOWEVER, that (i) the provisions of Section 2.1
may not be amended without the consent of the Shareholders named in, or
entitled to the benefit of, Section 2.1(a); (ii) the periods set forth in
Section 5 may not be extended without the consent of each and every
Shareholder; (iii) this Section may not be amended without the consent of
each and every Shareholder; and (iv) the obligations of any Shareholder may
not be increased without the consent of such Shareholder.
SECTION 6.6. NOTICES.
(a) All notices and other communications required or permitted
hereunder shall be in writing and (unless otherwise expressly provided on
Schedule I attached hereto) shall be mailed by registered or certified mail,
postage prepaid, or delivered either by hand or by messenger, or sent via
telex, telecopier, computer mail or other electronic means, addressed (i) if
to a Shareholder, as indicated on Schedule I, or at such other address as
such Shareholder shall have furnished in writing to the party initiating the
notice or communication, (ii) if to the Company, Helisys, Inc., Attention:
President, 00000 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or at such other address
as the Company shall have furnished in writing to the party initiating the
notice or communication, or (iii) if to Xxxxxxx Xxxxxx, c/o Helisys, Inc.,
00000 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or at such other address as
Xx. Xxxxxx shall have furnished in writing to the party initiating the notice
or communication..
(b) Any notice or other communications so addressed and mailed, postage
prepaid, by registered or certified mail (in each case, with return receipt
requested) shall be deemed to be delivered and given when so mailed. Any
notice so addressed and otherwise delivered shall be deemed to be given when
actually received by the addressee.
SECTION 6.7. GOVERNING LAW. This Agreement shall be construed in
accordance with, and the rights of the parties shall be governed by, the law
of the State of Delaware, without regard to the choice of law provisions
thereof..
SECTION 6.8. ENTIRE AGREEMENT. All prior understandings and agreements
between the parties hereto with respect to the transactions contemplated
hereby are merged in this Agreement, and this Agreement reflects all the
understandings with respect to such transactions. Nothing herein contained
shall be construed to obligate the Shareholders to make any additional
investment in the Company or to constitute the Shareholders as partners.
SECTION 6.9. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which when so executed and delivered shall constitute a
complete and original instrument but all of which
10
together shall constitute one and the same agreement, and it shall not be
necessary when making proof of this Agreement or any counterpart thereof to
account for any other counterpart.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its duly authorized officer or partner, as the case may be, as of
the date and year first above written.
HELISYS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: President and CEO
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx, Individually
/s/ Xxxxxx X. Xxxxxxxxxx III
-----------------------------------------
Xxxxxx X. Xxxxxxxxxx III, Individually
PURCHASERS:
TELANTIS VENTURE PARTNERS V, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Its: President
VISALIA TRUST
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Its:
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SCHEDULE I
SCHEDULE OF SHAREHOLDERS
NAME AND ADDRESS
Telantis Venture Partners V, Inc.
000 Xxx Xxxx
Xxxxx, XX 00000
(330) 664-2914
Visalia Trust
0000 Xxx Xxxxxxx
Xxxxx Xxxxxx, XX 00000
(000) 000-0000
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