EXHIBIT 5
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 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.
(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 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 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 4.1. 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:
"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, 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.
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 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 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:
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
