<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
-----------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date Report (Date of earliest event reported): April 22, 1998
SOLIGEN TECHNOLOGIES, INC.
(exact name or registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Wyoming 1-12694 95-4440838
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification
incorporation or organization) No.)
</TABLE>
19408 Londelius St., Northridge, California 91423
(Address of principal executive offices)
Registrant's telephone number, including area code: 818-718-1221
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<PAGE> 2
SOLIGEN TECHNOLOGIES
FORM 8-K
ITEM 5. OTHER EVENTS.
(a) Private Placement Financing. On April 24, 1998, Soligen Technologies, Inc.
(the "Company"), entered into a Series A Convertible Preferred Stock Purchase
Agreement (the "Stock Purchase Agreement") providing for the private placement
of up to 3,000 shares of a newly authorized series of preferred stock ("Series A
Preferred"). The Company has received gross proceeds of $800,000 from the sale
of 1,600 shares of Series A Preferred to two private investors pursuant to the
Stock Purchase Agreement. The Stock Purchase Agreement permits additional sales
of Series A Preferred to be completed until May 31, 1998. As of the date of this
report, the Company has not received a commitment from any investor to purchase
additional shares pursuant to the Stock Purchase Agreement.
At a special stockholders meeting held on April 20, 1998, the Company's
stockholders approved an amendment to the Company's Articles of Incorporation
authorizing the issuance of up to 10,000,000 shares of preferred stock. This
amendment authorizes the Company's Board of Directors to issue preferred stock
in one or more series on terms approved by the Board of Directors without the
necessity of further action or approval by the stockholders. Pursuant to this
authority, the Company's Board of Directors has authorized the issuance of up to
5,000 shares of Series A Preferred Stock having rights and preferences as set
forth in a Statement of Rights and Preferences (the "Statement") filed with the
Secretary of State of Wyoming on April 24, 1998. A copy of the Statement is
attached as an exhibit to this report. The following is a summary of certain
terms of the Series A Preferred, and reference is made to the Statement for a
complete description of the rights and preferences of the Series A Preferred.
The Series A Preferred is not entitled to any fixed or guaranteed dividend. Upon
a liquidation of the Company, the Series A Preferred is entitled to receive a
distribution of $500 per share in preference to any distribution to holders of
common stock. The approval of the holders of at least two-thirds of the
outstanding shares of Series A Preferred is required for certain significant
corporate actions, including mergers, sales of substantially all of the
Company's assets, or the issuance of shares having rights and preferences senior
to those of the Series A Preferred.
Each share of Series A Preferred is initially convertible into 500 shares of the
Company's Common Stock, subject to adjustment for recapitalizations, stock
splits and similar events. During the first year after issuance, the Series A
Preferred conversion ratio is subject to adjustment pursuant to an "economic
antidilution" provision which causes the conversion ratio to adjust upward in
the event the Company issues shares of common stock (or securities convertible
into or exercisable for common stock) at a price below $0.50 per share of Common
Stock. Beginning one year after the date of issuance, the conversion ratio of
the Series A Preferred is subject to downward adjustment in the event the
average trading price of the Company's Common Stock is greater than $0.50 per
share. The conversion ratio of the Series A Preferred increases by 12% effective
one year after the date of issuance, and thereafter increases at a rate of 12%
per annum. The Series A Preferred automatically converts into common stock in
the event the average trading price of the Company's common stock over 20
consecutive trading days is greater than $1.00 per share and the cumulative
trading volume on the American Stock Exchange during such 20 day period is at
least 300,000 shares. If the Company's common stock is trading on NASDAQ during
such period, the cumulative trading volume must be at least 450,000 shares. The
Series A Preferred also automatically converts
<PAGE> 3
into common stock in the event the Company completes an underwritten public
offering in which the Company receives gross proceeds of at least $10,000,000
and at a per share price of at least $1.00 per share (subject to adjustment for
stock splits, recapitalizations, etc.)
Purchasers of Series A Preferred are also parties to an Investor Rights
Agreement which grants certain rights of first offer and "piggyback"
registration rights. The holders of Series A Preferred, voting as a separate
class, are entitled to elect one member of the Company's Board of Directors.
(b) Amendment to Escrow Agreement. Soligen Technologies, Inc. (the "Company")
has entered into an amendment (the "Amendment") to the Escrow Agreement, dated
November 2, 1992 (the "Escrow Agreement"), pursuant to which certain shares
issued in connection with an acquisition transaction are held in escrow. A copy
of the Amendment is attached as an exhibit to this report.
As originally executed, the terms and conditions of the Escrow Agreement were
prescribed by the policies of the British Columbia Securities Commission and
were issued under its Local Policy 3-07. The escrow shares are held by the
Company's registrar and transfer agent pursuant to the terms of the Escrow
Agreement. Prior to the Amendment, the Escrow Agreement provided for the release
of one escrow share for each $0.41 Cdn. in net "cash flow" (as defined in the
Escrow Agreement) earned by the Company during the period beginning November 1,
1993 and ending October 31, 1998. The Escrow Agreement further provided that, if
the Company earned net "cumulative cash flow" (as defined in the Escrow
Agreement) of approximately Cdn. $4,000,000 or U.S. $3,050,000 during the five
year earn-out period, all of the escrow shares would be "earned out" and thereby
released from escrow. Any shares not released from escrow at the end of the five
year earn out period would have been canceled.
The Amendment, which was approved at the 1995 Annual Meeting of the Company's
stockholders, provides that the "earn-out" period will be extended for an
additional five years, and that all shares not previously released from escrow
will be released ten years after the date of issuance. In March 1998 the Company
received approval of the amendment from the British Columbia Securities
Commission, and the amendment has now been executed and become effective.
ITEM 7. EXHIBITS.
The following exhibits are filed herewith and this list constitutes the exhibit
index.
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
4.1 Articles of Amendment, as filed with Wyoming Secretary of State
on April 22, 1998, amending Section 9 of Articles of
Incorporation
4.2 Statement of Rights and Preferences of Series A Preferred Stock
4.3 Series A Convertible Preferred Stock Purchase Agreement, dated
April 24, 1998(excluding exhibits and schedules)
4.4 Investor Rights Agreement, dated April 24, 1998
<PAGE> 4
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
4.5 First Amendment to Escrow Agreement
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
April 30, 1998.
SOLIGEN TECHNOLOGIES, INC.
By: _________________________________________
Yehoram Uziel, President, Chief
Executive Officer and Chairman of the
Board of Directors
<PAGE> 1
EXHIBIT 4.1
SECRETARY OF STATE
STATE OF WYOMING
THE CAPITOL
CHEYENNE, WY 82002-0020
ARTICLES OF AMENDMENT
SOLIGEN TECHNOLOGIES, INC.
Pursuant to Section 17-16-602 and other provisions of the Wyoming Business
Corporation Act ("Act"), the Board of Directors of Soligen Technologies, Inc., a
Wyoming corporation by continuation, hereby adopts these Articles of Amendment
on behalf of the Corporation, which amendments were duly approved by shareholder
action pursuant to the provisions of the Act. The Corporation's Articles of
Continuance were filed with the Wyoming Secretary of State on April 13, 1993
("Articles of Continuance").
A. The name of the corporation is Soligen Technologies, Inc. (the
"Corporation").
B. Effective as of the date of filing of these Articles of Amendment
with the Wyoming Secretary of State, Section 9 of the Articles of Incorporation
is hereby amended and restated in its entirety as follows:
9. (a) The aggregate number of shares or other ownership units
which the Corporation has the authority to issue, itemized by classes, par
value of shares, shares without par value and series, if any, within a
class is:
<TABLE>
<CAPTION>
Number of Shares Class Par Value per Share
<S> <C> <C> <C>
90,000,000 Common $0 ("Common Shares")
10,000,000 Preferred $0 ("Preferred Shares")
</TABLE>
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors of the Corporation is hereby authorized to
issue the Preferred Shares in one or more series if it so determines, and
to give any such series of Preferred Shares a distinguishing designation.
The Board of Directors is further hereby authorized to determine, in whole
or in part, the preferences, limitations, and relative rights of (a) the
Preferred Shares before the issuance of any Preferred Shares, and (b) one
or more series of Preferred Shares before the issuance of shares of any
such series. All Preferred Shares shall have preferences, limitations and
relative rights identical with those of all other Preferred Shares,
provided that if the Preferred Shares are issued in one or more series,
all shares of a series shall have preferences, limitations, and relative
rights identical with those of other shares of the same series and, except
to the extent otherwise provided in the description of the series, with
those of other
<PAGE> 2
series of the same class. All actions by the Board of Directors of the
Corporation in such regards shall be by resolutions duly adopted.
C. The foregoing amendment was duly adopted by the Board of Directors
of the Corporation at a meeting held for such purpose on February 26, 1998, and
by the shareholders of the Corporation on April 20, 1998 ("Shareholders'
Meeting").
D. As of the date of the Corporation's authorization and execution of
these Articles of Amendment, the Corporation had authority to issue, and has
actually issued, only the Common Shares, and the total number of Common Shares
authorized by the Corporation prior to these Articles of Amendment, is
50,000,000 Common Shares. The designation, number of outstanding shares, and
number of votes entitled to be cast by each voting group, i.e., the holders of
the Common Shares, entitled to vote separately on the foregoing amendment were
32,682,338 Common Shares. The number of votes of each voting group indisputably
represented at the Shareholders' Meeting was ______________ Common Shares.
E. The total number of undisputed votes cast for the foregoing
amendment by each voting group, i.e., the holders of the Common Shares, was
_______________, which is sufficient for approval by the holders of the Common
Shares.
F. The foregoing amendments do not provide for an exchange,
reclassification or cancellation of issued shares.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment of the Corporation this _____ day of ______________, 1998.
SOLIGEN TECHNOLOGIES, INC.
By:_______________________________
<PAGE> 1
EXHIBIT 4.2
RIGHTS AND PREFERENCES OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF
SOLIGEN TECHNOLOGIES, INC.
9 (b) The Series A Convertible Preferred Stock ("Series A Preferred
Stock") shall consist of 5,000 (Five Thousand) shares, having the following
particular rights and preferences:
(i) Dividends. Holders of shares of Series A Preferred Stock shall not be
entitled to any fixed or guaranteed dividends, nor to any cumulative dividend
rights, but shall be entitled to receive out of the earnings and assets of the
Corporation only such dividends as may be lawfully declared on such dates or may
be determined in the discretion of the Board of Directors. No dividend or other
distribution whatsoever shall be declared or paid on Common Stock or Preferred
Shares having a preferential right to dividends ranking junior to the rights of
the Series A Preferred Stock unless a dividend or other distribution shall be
simultaneously paid on each outstanding share of Series A Preferred Stock which
is equal to or greater than the product of (i) the dividend or distribution
proposed to be declared or paid on each share of Common Stock or such junior
Preferred Stock (on an as-converted to Common Stock basis) times (ii) the number
of shares of Common Stock into which each such share of Series A Preferred Stock
is then convertible under Subsection 9(b)(iii) below. In any event, no dividend
or other distribution shall be paid at any time on either Series A Preferred
Stock or any other class or series of Preferred Stock or on Common Stock which
would have the effect of reducing the net assets of the Corporation below the
aggregate preferential amount (determined in accordance with Subsection 9(b)(ii)
below) payable to holders of Series A Preferred Stock upon liquidation or
dissolution of the Corporation.
(ii) Liquidation.
(a) Upon liquidation or dissolution of the Corporation, whether
voluntary or involuntary, each share of Series A Preferred Stock shall entitle
its holder to receive, out of the assets of the Corporation available for
distribution to shareholders, whether from capital, surplus or earnings, a
liquidation preference of Five Hundred Dollars ($500.00) per share, plus any
unpaid dividends declared pursuant to Subsection 9(b)(i) above (collectively,
the "Liquidation Preference"), before any distribution of such assets to the
holders of other classes or series of Preferred Stock or of Common Stock. After
setting apart or paying in full all such Liquidation Preferences on Series A
Preferred Stock and on any other classes or series of Preferred Stock entitled
to a stated preference on liquidation, further distribution of the remaining
available assets shall be made pro rata to holders of Common Stock. If, upon
liquidation or dissolution of the Corporation, the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of Series A Preferred Stock the full Liquidation Preferences to which
they are entitled hereunder, then such holders shall share ratably in any
distribution of assets according to the respective Liquidation Preferences that
would have been payable in
1
<PAGE> 2
respect of the shares held by them upon such distribution if all Liquidation
Preferences payable on or with respect to said shares were paid in full.
(b) The sale of all or substantially all of the Corporation's assets, or
the acquisition of the Corporation by another entity by means of merger,
consolidation, share exchange, reorganization or otherwise, pursuant to which
shares of the Corporation's capital stock are converted into cash, securities or
other property of the acquiring entity or any of its affiliates, shall be
regarded as a liquidation within the meaning of this Subsection 9(b)(ii);
provided, however, that each holder of Series A Preferred Stock shall have the
right to elect the benefits of the provisions of Subsection 9(b)(iii) or other
applicable conversion provisions in lieu of receiving payment of the Liquidation
Preference in the event of the liquidation, dissolution or winding up of the
Corporation pursuant to this Subsection 9(b)(ii); provided, further, that this
provision shall not apply if the holders of the Corporation's voting capital
stock immediately prior to such merger, consolidation, share exchange,
reorganization or sale of assets beneficially own, directly or indirectly, more
than fifty percent (50%) of the combined voting power of the capital stock of
the Corporation resulting from such merger, consolidation, share exchange,
reorganization or sale of assets.
(c) Whenever the distribution provided for in this Subsection 9(b)(ii)
shall be payable in property other than cash, the value of such distribution
shall be the fair market value of such property as determined in good faith by
the Corporation's Board of Directors.
(iii) Conversion.
(a) At any time or times, part or all of any holder's shares of Series A
Preferred Stock may be converted into Common Stock at the conversion price then
in effect in the manner specified below, upon delivery by the holder thereof of
written notice of conversion, specifying the number of such shares to be
converted, to the corporation at its principal business offices (or at the
office of any transfer agent for shares of Series A Preferred Stock or Common
Stock), accompanied by the certificate or certificates for the shares to be
converted, duly endorsed in blank or accompanied by signed instruments
appropriate for the transfer thereof. In addition, all of the outstanding shares
of Series A Preferred Stock shall, at the election of the Corporation's Board of
Directors, be automatically converted into Common Stock in the manner specified
below upon the occurrence of either of the following events (an "Automatic
Conversion Event"):
(1) Immediately prior to such time as the Corporation shall close
a firm commitment underwritten public offering of Common Stock pursuant to a
registration statement filed pursuant to the Securities Act of 1933, as amended,
("Securities Act") in which the Corporation receives gross proceeds of at least
Ten Million Dollars ($10,000,000) and at a price per share equal to or greater
than One Dollar ($1.00) (adjusted for stock splits, dividends, consolidations,
recapitalizations, and similar events); or
(2) At any such time as the Corporation's Common Stock shall have
traded above $1.00 per share (as adjusted for stock splits, dividends,
consolidations, recapitalizations and similar events) for twenty (20)
consecutive trading days on the American Stock Exchange (the "AMEX") or NASDAQ
and the cumulative trading volume of the Corporation's Common Stock
2
<PAGE> 3
during such twenty (20) consecutive trading days is equal to or greater than
Three Hundred Thousand (300,000) shares of Common Stock, if on AMEX, and Four
Hundred Fifty Thousand (450,000) if on NASDAQ.
(b) The shares of Common Stock (or other shares, securities or property)
into which the outstanding shares of Series A Preferred Stock are convertible as
computed in this Subsection 9(b)(iii) shall, promptly after delivery to the
Corporation of written notice of any conversion election, or promptly after the
occurrence of any Automatic Conversion Event, and upon surrender to the
Corporation of the certificates representing the Series A Preferred Stock to be
converted, duly endorsed in blank or accompanied by signed instruments
appropriate for transfer, be issued and delivered as soon as practicable to the
respective holders of such Series A Preferred Stock in due and proper form, and
shall be fully paid and nonassessable; as to any portion of the shares so
surrendered which are not subject to such conversion election, the Corporation
shall promptly issue to the holder thereof a certificate in due and proper form
representing the shares of Series A Preferred Stock which have not been so
converted. Conversion shall be deemed to have been made at the close of business
on the date that notice of such written election was given by the holder, or on
the date that the Corporation's Board of Directors elected to declare an
Automatic Conversion Event, irrespective of the date on which such surrender or
issuance may occur, and as of such election date each such holder shall be
deemed to have become the record holder of such respective number of shares of
Common Stock (or other shares, securities or property), and the Series A
Preferred Stock so converted shall be deemed forthwith cancelled and shall not
thereafter be deemed authorized or subject to reissuance. No adjustment shall be
made in the number of shares of Common Stock issuable upon conversion to reflect
declared but unpaid dividends on Series A Preferred Stock, but such dividends
for which the payment date has passed shall be paid in cash as of the date of
conversion of the shares of Series A Preferred Stock as to which they are owing.
The Corporation shall not be required to issue any fraction of a share of Common
Stock upon conversion of Series A Preferred Stock; if any fraction of a share of
Common Stock would, except for the foregoing clause, be issuable to any holder
on the conversion of any Series A Preferred Stock, the Corporation shall pay to
the holder of such converted Series A Preferred Stock an amount in cash equal to
the then current fair market value of such fractional interest.
(c) The number of shares of Common Stock issuable upon conversion of any
share of Series A Preferred Stock shall be determined as follows:
(1) If the conversion occurs on or before one (1) year from the
date of issuance of such share of Series A Preferred Stock, the number of shares
of Common Stock issuable upon conversion of any share of Series A Preferred
Stock shall be determined by dividing Five Hundred Dollars ($500.00) by the
conversion price at the time of conversion, which shall initially be fifty cents
($0.50) per share, and which shall thereafter be subject to adjustment from time
to time as set forth herein (the "Conversion Price").
(2) If the conversion occurs after one (1) year from the date of
issuance of such share of Series A Preferred Stock, the number of shares of
Common Stock issuable upon conversion of any share of Series A Preferred Stock
shall be determined by dividing (i) Five Hundred Dollars ($500.00) plus an
amount equal to (x) Five Hundred Dollars ($500.00) multiplied by (y) a fraction,
the numerator of which is twelve percent (12%) multiplied by the
3
<PAGE> 4
total number of days such share of Series A Preferred Stock has been
outstanding, and the denominator of which is three hundred sixty-five (365) by
(ii) the greater of (a) the Conversion Price or (b) the Average Closing Price
(as defined below) of the Common Stock. As used in this Subsection
9(b)(iii)(c)(2), "Average Closing Price" shall mean the average closing price of
the Common Stock on the AMEX or NASDAQ over the twenty (20) consecutive trading
days immediately preceding the date of the holder's written notice requesting
the conversion or, if the cumulative trading volume of the Corporation's Common
Stock during such twenty (20) consecutive trading days is not equal to or
greater than Three Hundred Thousand (300,000) shares of Common Stock if on AMEX,
and Four Hundred Fifty Thousand (450,000) if on NASDAQ, then over such longer
period of time during which such cumulative trading volume has equaled or
exceeded Three Hundred Thousand (300,000) shares of Common Stock, if on AMEX,
and Four Hundred Fifty Thousand (450,000) if on NASDAQ.
(d) Adjustment of Conversion Price Upon Issuance of Common Stock or
Convertible Securities. Except as provided in Subsection 9(b)(iii)(e), if from
and after the date a share of Series A Preferred Stock is first issued and
within one (1) year following the date of such issuance, the Corporation shall
issue or sell, or, in accordance with Subsections 9(b)(iii)(d)(1) through
9(b)(iii)(d)(5), is deemed to have issued or sold, any shares of Common Stock,
or any stock or security convertible into or exchangeable for Common Stock,
without consideration or for a consideration per share less than the Conversion
Price in effect immediately prior to the time of such issue or sale, then,
forthwith upon each such issue or sale, the Conversion Price shall be reduced to
the price determined by dividing (i) an amount equal to the sum of (x) the
number of shares of Common Stock of the Corporation outstanding immediately
prior to such issue or sale (including the number of shares of Common Stock
issuable pursuant to conversion of all of the outstanding shares of Series A
Preferred Stock at the then existing Conversion Price) multiplied by the then
existing Conversion Price plus (y) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the sum of the number of shares of
Common Stock outstanding immediately after such issue or sale (including the
Common Stock issuable pursuant to the conversion or exchange of the securities
or stock issued or sold in such issue or sale) plus the number of shares of
Common Stock issuable pursuant to conversion of all of the outstanding shares of
Series A Preferred Stock (at the Conversion Price existing immediately before
such issue or sale).
For purposes of this Subsection 9(b)(iii)(d), the following Subsections
9(b)(iii)(d)(1) to 9(b)(iii)(d)(5) shall also be applicable:
(1) Issuance of Rights or Options. In case at any time the Corporation
shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any options, warrants or other rights to subscribe for or to purchase
shares of the Corporation's Common Stock or any stock or security convertible
into or exchangeable for Common Stock (such options, warrants and rights being
called "Options" and such convertible or exchangeable stock or securities being
called ""Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
4
<PAGE> 5
Corporation upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
shares of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities shall be deemed to have been issued for such price per
share as of the date of granting of such options or the issuance of such
Convertible Securities. Except as otherwise provided in Subsection
9(b)(iii)(d)(3), no adjustment of the Conversion Price shall be made upon the
actual issue of the Common Stock or Convertible Securities upon exercise of such
Options or upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (i) the total amount received or receivable
by the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (ii)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then the shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such price per
share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in Subsection 9(b)(iii)(d)(3), no adjustment of the
Conversion Price shall be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities and (b) if any such
issuance or sale of such Convertible Securities is made upon exercise of any
Options to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions of
this Subsection 9(b)(iii)(d), no further adjustment of the Conversion Price
shall be made by reason of such issuance or sale.
(3) Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for in
any Option referred to in Subsection 9(b)(iii)(d)(1), or the rate at which
Convertible Securities referred to in Subsection 9(b)(iii)(d)(2) are convertible
into or exchangeable for Common Stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to protect
against dilution), the Conversion Price in effect at the time of such event
shall forthwith be readjusted to the Conversion Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold; and on
the expiration of any such Option or termination of any such right to convert or
exchange such Convertible Securities, the Conversion Price then in effect
hereunder
5
<PAGE> 6
shall forthwith be increased to the Conversion Price which should have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
(4) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration in whole or
in part other than cash, the amount of the consideration other than cash
received by the Corporation shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board of Directors of the
Corporation, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of the
Corporation.
(5) Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issuance or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be, and, in each such case, the number of shares of
Common Stock into which shares of Series A Preferred Stock may be converted
shall be increased in proportion to the increase (through such dividend or
distribution) in the number of outstanding shares of Common Stock, by reducing
the Conversion Price in the same proportion.
(e) Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Conversion Price pursuant to Subsection 9(b)(iii)(d) in the
case of the issuance of: (i) up to an aggregate of 4,990,000 shares
(appropriately adjusted to reflect the occurrence of any event described in
Subsection 9(b)(iii)(f)) of Common Stock pursuant to the Corporation's 1993
Stock Option Plan, as amended; (ii) up to an aggregate of 4,838,255 shares of
Common Stock (appropriately adjusted to reflect the occurrence of any event
described in Subsection 9(b)(iii)(f)) pursuant to the exercise of outstanding
warrants; and (iii) such other securities as the holders of sixty-six and
two-thirds percent (66 2/3%) of the then outstanding shares of Series A
Preferred Stock shall agree in writing may be issued without causing an
adjustment in the Conversion Price.
(f) Subdivision or Combination of Common Stock. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, without
making a corresponding subdivision of the outstanding shares of Series A
Preferred Stock, then the Conversion Price in effect
6
<PAGE> 7
immediately prior to such subdivision shall be proportionately reduced.
Conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares without a corresponding adjustment to the number
of outstanding shares of Series A Preferred Stock, then the Conversion Price in
effect immediately prior to such combination shall be proportionately increased.
(g) Other Distributions. In the event this Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by this Corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in Subsection 9(b)(iii)(h), then, in each
such case for the purpose of this Subsection 9(b)(iii)(g), the holders of the
Series A Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of this Corporation into which their shares of Series A Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of Common Stock of this Corporation entitled to receive such distribution.
(h) Reorganization or Reclassification. If any capital reorganization or
reclassification of the capital stock of the 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 Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series A
Preferred Stock shall thereupon have the right to receive, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore receivable upon the conversion of such
share or shares of Series A Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Series A Preferred Stock equal to the number of
shares of such Common Stock immediately theretofore receivable upon such
conversion had such reorganization or reclassification not taken place, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.
(i) Notice of Adjustment. Upon any adjustment of the Conversion Price,
then, and in each such case, the Corporation shall give written notice thereof
as soon as practicable thereafter, by first class, registered or certified mail,
postage prepaid, return receipt requested, or by telecopier (to be promptly
followed by notice sent by registered or certified mail, return receipt
requested, as set forth above), addressed to each holder of shares of Series A
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the conversion rate resulting from such
adjustment, setting forth in reasonable detail, the manner in which such
calculation was made.
(j) Shares to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized but unissued Common Stock, solely for the
purpose of issuance upon the conversion of Series A Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series A Preferred Stock. The
Corporation covenants that all shares of Common Stock which shall be
7
<PAGE> 8
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Corporation will take such action as may be necessary to assure that all such
shares of Common Stock may be so issued without violation of any applicable law
or regulation, or of any requirement of any securities exchange upon which the
Common Stock may be listed.
(k) Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series A Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series A Preferred Stock or its
affiliate which is being converted.
(iv) Voting.
(a) Holders of the Corporation's outstanding Series A Preferred Stock
shall be entitled to cast, on all matters submitted to a vote of the
shareholders of the Corporation and on which shareholders are entitled to vote
under the provisions of the Wyoming Business Corporation Act, that number of
votes equal to the number of shares of Common Stock into which such outstanding
Series A Preferred Stock is then convertible under Subsection 9(b)(iii) at the
record date for the determination of shareholders entitled to vote on such
matter, and with respect to such vote, shall be entitled, notwithstanding any
provision hereof, to notice of any stockholders' meeting in accordance with the
Bylaws of this Corporation. Fractional votes shall not, however, be permitted
and any fractional voting rights resulting from the aforementioned formula
(after aggregating all shares into which shares of Series A Preferred Stock held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half rounded upward to one). Holders of Series A Preferred Stock shall
vote together with the holders of Common Stock on all such matters except as
otherwise provided herein.
(b) For so long as more than fifty percent (50%) of all shares of Series
A Preferred Stock issued by the Corporation shall be outstanding, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the then
outstanding shares of Series A Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) as a separate voting group,
increase the number of directors constituting the Board of Directors to a number
greater than seven (7).
(c) For so long as more than fifty percent (50%) of all shares of Series
A Preferred Stock issued by the Corporation shall be outstanding, the holders of
the Series A Preferred Stock, voting as a separate voting group, shall be
entitled to elect one (1) director to the Corporation's Board of Directors,
which director shall be subject to the reasonable approval of the Corporation.
At any meeting held for the purpose of electing directors, the presence in
person or by proxy of the holders of a majority of the outstanding shares of
Series A Preferred Stock shall constitute a quorum of such shares for the
election of the director to be elected.
(d) Except as otherwise provided by law, directors to be elected by the
holders of Series A Preferred Stock shall be elected by a majority of the votes
cast by the Series A Preferred Stock, at a meeting of shareholders at which a
quorum is present. Any vacancy in any
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<PAGE> 9
directorship elected by the holders of Series A Preferred Stock shall be filled
only by the vote or written consent of the holders of a majority of the then
outstanding shares of Series A Preferred Stock. Any director who shall have been
elected by the holders of Series A Preferred Stock may be removed from office,
whether with or without cause, only by the vote or written consent of the
holders of a majority of the then outstanding shares of Series A Preferred
Stock.
(v) Restrictions. For so long as more than fifty percent (50%) of all shares
of Series A Preferred Stock issued by the Corporation shall be outstanding,
except where the vote or written consent of the holders of a greater number of
shares of the Corporation is required by law or by the Articles of
Incorporation, and in addition to any other vote required by law or the Articles
of Incorporation without the approval of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the then outstanding shares of Series A
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a separate voting group, the Corporation will not:
(a) Create or authorize the creation of any additional class or series
of shares, or create any bonds, notes or other obligations convertible into,
exchangeable for or having rights to purchase any class or series of shares,
which are senior to the Series A Preferred Stock with respect to voting rights,
dividend rights, redemption rights, and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation;
(b) Increase the authorized amount of the Series A Preferred Stock;
(c) Increase the authorized amount of any additional class or series of
shares of stock unless the same ranks pari passu or junior to the Series A
Preferred Stock with respect to voting rights, dividend rights, redemption
rights, and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation.
(d) Create or authorize any obligation or security convertible into
shares of Series A Preferred Stock or into shares of any other class or series
of shares unless the same ranks junior to the Series A Preferred Stock with
respect to voting rights, dividend rights, redemption rights, and the
distribution of assets on the liquidation, dissolution or winding up of the
Corporation;
(e) Consent to any liquidation, dissolution or winding up of the
Corporation or consolidate or merge into or with any other entity or entities or
sell or transfer all or substantially all of the assets of the Corporation other
than in the ordinary course of business;
(f) Amend its Articles of Incorporation (except as provided in
paragraphs (a) or (c) above) or Bylaws;
(g) Pay or declare any dividends or make any distribution with respect
to any class of shares of the Corporation's stock other than Series A Preferred
Stock; or
(h) Change the Corporation's primary business.
(vi) Sinking Fund. There shall be no sinking fund provision for the payment of
dividends, liquidation preferences, or redemption of the shares of Series A
Preferred Stock.
9
<PAGE> 1
EXHIBIT 4.3
SOLIGEN TECHNOLOGIES, INC.
SERIES A CONVERTIBLE
PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of
April 24, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. PURCHASE AND SALE OF STOCK....................................................1
1.1 Sale and Issuance of Series A Stock....................................1
1.2 Closing................................................................1
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................2
2.1 Organization, Qualification and Good Standing..........................2
2.2 Capitalization.........................................................2
2.3 Subsidiaries...........................................................3
2.4 Authorization..........................................................3
2.5 Valid Issuance of Preferred and Common Stock...........................4
2.6 Governmental Consents; Compliance With Laws............................4
2.7 Litigation.............................................................4
2.8 Intellectual Property..................................................5
2.9 Compliance With Other Instruments......................................6
2.10 Agreements; Action.....................................................6
2.11 Related-Party Transactions.............................................6
2.12 Registration Rights....................................................7
2.13 Title to Property and Assets; Condition of Assets......................7
2.14 Licenses...............................................................7
2.15 SEC Filings; Financial Statements......................................7
2.16 Undisclosed Liabilities................................................8
2.17 Changes................................................................8
2.18 Employees.............................................................10
2.19 Employee Benefit Plans................................................10
2.20 Taxes.................................................................10
2.21 Corporate Documents...................................................11
2.22 Minutes...............................................................11
2.23 Environmental and Safety Laws.........................................11
2.24 Brokers or Finders....................................................11
2.25 Offering Valid........................................................11
2.26 Insurance.............................................................11
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
2.27 Use of Proceeds.......................................................12
2.28 Customers and Suppliers...............................................12
2.29 Disclosure............................................................12
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR...............................12
3.1 Authorization.........................................................12
3.2 Purchase Entirely for Own Account.....................................13
3.3 Investment Experience.................................................13
3.4 Restricted Securities.................................................13
3.5 Legends...............................................................13
3.6 Residency.............................................................14
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING..........................15
4.1 Representations and Warranties........................................15
4.2 Performance...........................................................15
4.3 Compliance Certificate................................................15
4.4 Investor Rights Agreement.............................................15
4.5 Agreement.............................................................15
4.6 Proceedings and Documents.............................................15
4.7 Opinion of Counsel....................................................15
4.8 Legal Expenses........................................................16
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING.......................16
5.1 Representations and Warranties........................................16
5.2 Payment of Purchase Price.............................................16
5.3 Securities Laws Qualification.........................................16
5.4 Performance...........................................................16
6. INDEMNIFICATION..............................................................16
6.1 Indemnity by the Company..............................................16
6.2 Notice of Indemnity Claim.............................................17
6.3 Limitations on Investor's Indemnities.................................18
7. COVENANTS....................................................................18
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
7.1 Affirmative Covenants and Agreements of the Company...................18
7.2 Covenants and Agreements of Investor..................................19
8. MISCELLANEOUS................................................................19
8.1 Survival of Warranties................................................19
8.2 Successors and Assigns................................................20
8.3 Governing Law; Jurisdiction and Venue.................................20
8.4 Titles and Subtitles..................................................20
8.5 Notices...............................................................20
8.6 Finder's Fees.........................................................21
8.7 Amendments and Waivers................................................21
8.8 Severability..........................................................22
8.9 Entire Agreement......................................................22
8.10 Expenses..............................................................22
8.11 Further Assurances....................................................22
8.12 Counterparts -- Facsimile Signatures..................................22
LIST OF EXHIBITS/SCHEDULES........................................................24
</TABLE>
-iii-
<PAGE> 5
SERIES A CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this
"Agreement") is made as of April 24, 1998, by and among Soligen Technologies,
Inc., a Wyoming corporation (the "Company"), and Koyah Leverage Partners, L.P.,
a Delaware limited partnership, and Koyah Partners, L.P., a Delaware limited
partnership (Koyah Leverage Partners, L.P. and Koyah Partners, L.P. are referred
to collectively herein as the "Investor").
RECITALS
A. The Investor desires to purchase an aggregate of up to 3,000 shares
of the Company's Series A Convertible Preferred Stock (the "Series A Stock")
pursuant to this Agreement.
B. The Company desires to sell and issue to the Investor up to 3,000
shares of Series A Stock at a price of $500 per share, for a total purchase
price of $1,500,000.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties hereto agree as follows:
1. PURCHASE AND SALE OF STOCK
1.1 SALE AND ISSUANCE OF SERIES A STOCK
(a) The Company has adopted and filed, or prior to the Closing (as
defined in paragraph (a) of Subsection 1.2), will have adopted and filed, with
the Secretary of State of the State of Wyoming an amendment to its Articles of
Incorporation in the form attached hereto as Exhibit A (the "Amendment"), which
includes a designation of the rights and preferences of the Series A Stock.
(b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase, and the Company agrees to sell and issue to the
Investor at the Closings (as defined in paragraph (a) of Subsection 1.2), up to
3,000 shares of Series A Stock (but Investor shall not be obligated to purchase
3,000 shares of the Series A Stock) at a purchase price of $500 per share, for a
total purchase price of $1,500,000 (the "Purchase Price").
1.2 CLOSING
(a) The purchase and sale of the Series A Stock shall take place
in one or more closings, the first to occur on April 24, 1998 (the "First
Closing Date") at the offices of Garvey, Schubert & Barer, in Seattle,
Washington, upon the satisfaction of the conditions set forth in Sections 4 and
5, or at such other time and place as the parties may mutually agree (the "First
Closing"). Subsequent closings shall occur on or before May 31, 1998, or at such
other time and place on which the Company and Investor mutually agree (together
with the First Closing, the "Closings"). At each Closing, the
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<PAGE> 6
Company shall deliver to the Investor a certificate representing the number of
shares of Series A Stock purchased by the Investor at such Closing against
payment to the Company therefor by wire transfer of immediately available funds.
Schedule 1 sets forth the number of shares of Series A Stock purchased by the
Investor at each Closing and the consideration paid by the Investor at each
Closing. At the First Closing, the Investor shall purchase a minimum of 1,600
shares of Series A Stock. Schedule 1 may be amended by the Company at each
Closing to reflect the purchase of shares of Series A Stock occurring at the
Closing.
(b) The obligation of the Company and the Investor to consummate
the transactions contemplated at each Closing is subject to the satisfaction, on
or before the date of such Closing, of the conditions set forth in Sections 4
and 5.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As used herein, the term: "to the best knowledge of the Company" (or words
to that effect) shall mean such knowledge and belief as may be acquired after
reasonable inquiry of the directors, officers, and employees of the Company. The
Company (which for purposes of this Section 2 includes its wholly-owned
subsidiaries set forth on paragraph 2.3 of the Schedule of Exceptions attached
hereto (the "Subsidiaries")) hereby represents and warrants to the Investor
that, except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B:
2.1 ORGANIZATION, QUALIFICATION AND GOOD STANDING
The Company is a corporation duly organized and validly existing under the
laws of the State of Wyoming and has all requisite corporate power and authority
to own and operate its properties and assets, to execute and deliver this
Agreement and the Investor Rights Agreement (attached hereto as Exhibit D and
referred to herein as the "Investor Rights Agreement" and together with this
Agreement and the Amendment, the "Related Documents"), to issue and sell the
Series A Stock and the Company's common stock ("Common Stock") issuable upon
conversion thereof (the "Conversion Shares"), to carry out the provisions of
this Agreement, the Investor Rights Agreement, and the Amendment and to carry on
its business as presently conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, properties,
assets, liabilities, financial condition, operations or prospects of the Company
and its Subsidiaries taken as a whole (the "Condition of the Company").
2.2 CAPITALIZATION
Immediately prior to or concurrently with the Closing, the capital stock
of the Company shall consist of the preferred stock, common stock and rights
described in paragraphs (a), (b) and (c) below.
2
<PAGE> 7
(a) Preferred Stock
There are 10,000,000 shares of preferred stock authorized, with no
par value per share, 5,000 shares of which have been designated as Series A
Stock, and none of which is outstanding. The rights, privileges and preferences
of the Series A Stock are as stated in the Amendment.
(b) Common Stock
There are 90,000,000 shares of Common Stock authorized, with no par
value per share, 32,682,338 shares of which are issued and outstanding. Of the
authorized but unissued Common Stock, 6,500,000 shares are reserved for issuance
upon the conversion of the Series A Stock, 4,838,255 are reserved for issuance
upon exercise of outstanding warrants, and 4,990,000 shares are reserved for
issuance under the Company's stock option plan.
(c) Rights
Except for the conversion privileges of the Series A Stock and other
rights, privileges and agreements contemplated pursuant to this Agreement, and
as set forth in paragraph (b) of Subsection 2.2, there are no outstanding
options, warrants, subscriptions, rights (including conversion or preemptive
rights or first refusal rights), agreements for the purchase or acquisition from
the Company or by the Company of any shares of the Company's capital stock or
securities convertible into its capital stock, or, to the Company's knowledge,
any voting agreements with respect to the Company's securities.
2.3 SUBSIDIARIES
Other than the entities listed on paragraph 2.3 of the Schedule of
Exceptions, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association, partnership or
other business or investment entity.
2.4 AUTHORIZATION
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery of this
Agreement and the Investor Rights Agreement, the performance of all obligations
of the Company hereunder and thereunder and the authorization, sale, issuance
and delivery of the Series A Stock and Conversion Shares has been taken or will
be taken before the Closing. This Agreement and the Investor Rights Agreement
have been duly executed and delivered by the Company and constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
terms, subject to (a) applicable bankruptcy, insolvency, reorganization, or
similar laws relating to or affecting the enforcement of creditors' rights; (b)
the availability of equitable remedies; and (c) the effect of public policy on
the indemnification provisions set forth in the Investor Rights Agreement.
3
<PAGE> 8
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK
The Series A Stock, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free of any liens or encumbrances. The
Conversion Shares have been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Amendment will be duly and validly
issued, fully paid and nonassessable and free of any liens or encumbrances. The
Series A Stock will be free of restrictions on transfer other than applicable
federal and state securities laws.
2.6 GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAWS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, regional,
state or local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement, except for filings, if any, required pursuant to applicable state
securities laws, which filings will be made within the required statutory
period, and the filing pursuant to Regulation D of the Securities and Exchange
Commission (the "SEC") of Form D, which filing will be effected within fifteen
(15) days following the Closing. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership or possession of its properties or
assets, which violation would materially and adversely affect the Condition of
the Company.
2.7 LITIGATION
There is no action, suit, claim, proceeding or investigation pending or,
to the Company's knowledge, currently threatened against the Company that
questions the validity of this Agreement or the other agreements contemplated
herein or the right of the Company to enter into any of such agreements, or to
consummate the transactions contemplated herein or therein, or that would either
individually or in the aggregate have a material adverse effect on the Condition
of the Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
the foregoing. The foregoing includes, without limitation, actions pending or,
to the Company's knowledge, threatened (or any basis therefor known to the
Company) involving the prior employment of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. There is no action, suit, proceeding
or investigation by the Company currently pending or which the Company intends
to initiate. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality that could have a material adverse effect on the Condition of
the Company. None of the transactions contemplated hereby or by the Related
Documents have been enjoined by any authority and no suit or other proceeding
challenging the transactions contemplated by the Related Documents (of which the
Company has been served or is aware) has been instituted or, to the best of
4
<PAGE> 9
the Company's knowledge, threatened, and no investigative demand on the Company
related to such transactions has been made by any authority. There are no
unsatisfied judgments or outstanding orders, injunctions, decrees, stipulations
or awards of any authority against the Company, or any of its Subsidiaries or
against any of their properties or assets that, individually or in the
aggregate, exceed $25,000 or are otherwise material to the Condition of the
Company.
2.8 INTELLECTUAL PROPERTY
(a) The Company owns or has the rights to use, sell or license all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
software data, information, proprietary rights and processes (collectively,
"Intellectual Property") necessary or required for its business as now
conducted, and believes it can obtain, on commercially reasonable terms, any
additional rights necessary or required for its business as proposed to be
conducted, and the Company's Intellectual Property, products, services and
business do not, and, to the knowledge of the Company, would not, conflict with,
or constitute an infringement of, the rights of others. Since its organization,
the Company has taken reasonable measures to protect the value (and, to the
extent applicable, the confidentiality and security) of all Intellectual
Property used in its products, services and business. There is no pending or, to
the knowledge of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any of the
Company's Intellectual Property.
(b) The Company has not received any communications alleging that
the Company or any of its employees has violated or infringed, or by conducting
its business as proposed, would violate or infringe, any of the Intellectual
Property rights of any other person or entity.
(c) No employee of the Company is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would cause the Company to infringe upon the Intellectual Property
rights of any other person or entity, that would interfere with the use of such
employee's best efforts to promote the best interests of the Company or that
would conflict with the Company's business as proposed to be conducted.
(d) After giving effect to the Related Documents, the execution,
delivery and performance of this Agreement and the Investor's Rights Agreement
will not constitute a breach of any instrument or agreement governing any of the
Company's Intellectual Property, will not cause the forfeiture or termination or
give rise to a right of forfeiture or termination of any of the Company's
Intellectual Property or impair the right of the Company to use, sell or license
any of the Company's Intellectual Property or portion thereof, except for any
such breach, forfeiture, termination, right of forfeiture or termination or
impairment that would not, individually or in the aggregate, result in a
material adverse effect on the Condition of the Company.
5
<PAGE> 10
2.9 COMPLIANCE WITH OTHER INSTRUMENTS
The Company is not in violation of any provision of its Articles of
Incorporation, as amended, or its Bylaws, or in violation or default of any
provision of any instrument, judgment, order, writ, decree or contract to which
it is a party or by which it is bound, which violation or default would
materially and adversely affect the Condition of the Company. The execution,
delivery and performance of this Agreement and the Investor Rights Agreement
will not result in any such violation or default or require any consent under,
or be in conflict with, or constitute, with or without the passage of time and
giving of notice, either a violation or default under, any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any lien, charge or encumbrance upon any properties or assets
of the Company.
2.10 AGREEMENTS; ACTION
(a) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) made any loans or advances to any person, other than
in the ordinary course of business, (iii) sold, exchanged or otherwise disposed
of any of its assets or rights, other than in the ordinary course of business;
or (iv) redeemed, or obligated itself to redeem, any of its capital stock.
(b) Except for agreements explicitly contemplated herein, there
are no agreements, understandings or proposed transactions between the Company,
on the one hand, and any of its officers, directors, affiliates or any affiliate
thereof, on the other hand.
(c) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Articles of Incorporation, as amended, its Bylaws or other governing documents
that materially adversely affects the Condition of the Company.
2.11 RELATED-PARTY TRANSACTIONS
No employee, officer or director of the Company or, to our knowledge, any
member of the immediate family of any of the foregoing:
(a) Owns or has owned, directly or indirectly, any interest in
(except for less than one percent stock holdings for investment purposes in
securities of publicly traded companies), or is an officer, director, employee
or consultant of, any entity which is or was engaged in business as, a
competitor, lessor, lessee, supplier or customer of the Company;
(b) Owns, directly or indirectly, as a whole or in part, any
tangible or intangible property that the Company uses or contemplates using in
the conduct of its business; or
6
<PAGE> 11
(c) Has any cause of action or other claim whatsoever against, or
owes any amount to, the Company, except for immaterial claims in the ordinary
course of business such as for accrued vacation pay, accrued benefits under
employee benefit plans, and medical, dental and other similar health benefit
plans existing on the date hereof.
2.12 REGISTRATION RIGHTS
Except as otherwise set forth in the Investor Rights Agreement, the
Company has not granted or agreed to grant any registration rights to any person
or entity.
2.13 TITLE TO PROPERTY AND ASSETS; CONDITION OF ASSETS
The Company owns or leases all of the property and assets necessary for
the conduct of its business as now conducted and as proposed to be conducted
(the "Company Property"). With respect to the Company Property it owns, the
Company has good and marketable title to such property and all such property is
free and clear of all mortgages, liens, loans and encumbrances, except liens and
encumbrances that arise in the ordinary course of business and do not materially
impair the Company's ownership or use of such property or assets. With respect
to the Company Property it leases, the Company is in compliance with such leases
in all material respects and holds a valid leasehold interest free of any liens,
claims or encumbrances. All facilities and all material machinery, equipment,
fixtures, vehicles and other Company Property owned, leased or used by the
Company, allowing for ordinary wear and tear, are in good operating condition
and repair and are reasonably fit and usable for the purposes for which they are
being used and conform to all applicable laws relating to their construction,
use and operation, except where such failure, individually or in the aggregate,
would not have a material adverse effect on the Condition of the Company. No
Person other than the Company owns any equipment or other tangible assets or
property situated on the premises of the Company necessary to the operation of
the business of the Company, except for leased items, as to which leases, the
Company is not in default thereof.
2.14 LICENSES
The Company has all licenses and permits (federal, state, foreign and
local) necessary to conduct its business and the ownership or possession by the
Company of its properties and assets, and such licenses and permits are in full
force and effect. The Company is in compliance with respect to such licenses or
permits, and no proceeding is pending or, to the Company's knowledge, threatened
to revoke any of such licenses or permits.
2.15 SEC FILINGS; FINANCIAL STATEMENTS
(a) The Company has timely filed all forms, proxy statements,
registration statements, reports, schedules, and other documents filed or
required to be filed by the Company with the SEC under the Securities Act of
1933, as amended and the Securities Exchange Act of 1934, as amended
(collectively, the "Securities Laws") since 1995 (the "SEC Reports"). The SEC
Reports (i) at the time filed, complied in all material
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respects with the applicable requirements of the Securities Laws and (ii) did
not, at the time they were filed (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such SEC Reports or necessary in order to make the statements in
such SEC Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the financial statements (including, in each case, any
related notes) contained in the SEC Reports through the period ending December
31, 1997 ("Financial Statements") complied as to form in all material respects
with the applicable published rules and regulations of the SEC with respect
thereto, was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited interim statements, as
permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of the Company as at the respective
dates and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
2.16 UNDISCLOSED LIABILITIES
Except as and to the extent reflected or reserved against in the Financial
Statements, the Company did not have, as of December 31, 1997, any debts,
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, including, without limitation,
liabilities or obligations on account of taxes or other governmental charges or
penalties, interest or fines thereon or in respect thereof which, individually
or in aggregate, have a material adverse effect on the Condition of the Company.
The Company does not know and does not have any grounds to know of any basis for
any assertion against the Company of any debt, liability or obligation of any
nature or in any amount not fully reflected or reserved against in the Financial
Statements or disclosed in this Agreement, other than debts, liabilities or
obligations referred to in paragraph (e) of Subsection 2.17 hereof.
2.17 CHANGES
Since December 31, 1997, there has not been:
(a) Any material change in the Condition of the Company, except
changes in the ordinary course of business, none of which has been materially
adverse, and all of which in the aggregate have not been materially adverse to
the Company;
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the properties, assets or business
of the Company;
(c) Any material increase in the compensation or rate of
compensation or commissions payable or to become payable by the Company to any
of its directors,
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officers, employees, salespersons or agents, or any material change
in any bonus, profit-sharing, retirement or other similar plan, agreement or
arrangement or any adoption of, or entry into, any new bonus, profit-sharing,
group life or health insurance, or other similar plan, agreement or arrangement;
(d) Any material change in the accounting methods or practices
followed by the Company;
(e) Any material debt, obligation or liability (whether absolute
or contingent) incurred by the Company (whether or not presently outstanding)
except (i) current liabilities incurred, and obligations under agreements
entered into, in the ordinary course of business and (ii) obligations or
liabilities entered into or incurred in connection with the execution of this
Agreement;
(f) Any sale, lease, abandonment or other disposition or creation
of any encumbrance by the Company of any real property or, in each case other
than in the ordinary course of business, of any equipment or other operating
properties or any sale, assignment, transfer, license or other disposition by
the Company of any Intellectual Property or other intangible asset;
(g) Any labor trouble, strike or any other occurrence, event or
condition of any similar character that materially and adversely affects or may
materially and adversely affect the assets, properties, business or prospects of
the Company;
(h) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty, or otherwise;
(i) Any waiver by the Company of a valuable right or a material
debt owed to it except in the ordinary course of business;
(j) Any direct or indirect loans made by the Company to any
shareholder, employee, officer, or director of the Company, other than advances
made in the ordinary course of business;
(k) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(l) Any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of the Company;
(m) Any resignation or termination of employment of any key
officers and, the Company, to the best of its knowledge, does not know of any
impending resignation or termination of employment of any such key officers;
(n) Any changes to any material agreement to which the Company is
a party which materially and adversely affects the Condition of the Company; or
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(o) Any event, or occurrence of any event, that would cause any
SEC Report to be misleading or to have omitted a material fact.
2.18 EMPLOYEES
The Company has no collective bargaining agreements with any of its
employees. There is no labor union organizing activity pending or, to the
Company's knowledge, threatened with respect to the Company. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of key employees. The employment of each officer and employee
of the Company is terminable at the will of the Company. To its knowledge, the
Company has complied in all material respects with all applicable state and
federal equal employment opportunity and other laws related to employment. To
the Company's knowledge, no employee of the Company, nor any consultant with
whom the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company;
and to the Company's knowledge, the continued employment by the Company of its
present employees, and the performance of the Company's contracts with its
independent contractors will not result in any such violation. The Company has
not received any notice alleging that any such violation has occurred. No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. The Company has entered into a confidentiality agreement in a
form previously provided to the Investor's counsel with each officer, director
and key employee of the Company. All persons having access to the Company's
Intellectual Property have executed and are bound by confidentiality agreements.
2.19 EMPLOYEE BENEFIT PLANS
The Company does not have any "employee benefit plan" as defined in the
Employee Retirement Income Security Act of 1974, as amended.
2.20 TAXES
The Company has filed all tax returns (federal, state, foreign and local)
required to be filed by it and such returns are true and correct in all material
respects, and all taxes shown to be due and payable on such returns or on any
assessments received by the Company and all other taxes (federal, state, foreign
and local) due and payable by the Company on or before the date hereof have been
paid. There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against the Company, nor are there any actions, suits, proceedings,
investigations or claims now pending against the Company in respect of any tax
or assessment, or, to the Company's knowledge, any matters under discussion
within any federal, state, foreign or local authority relating to any taxes or
assessments, or any
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claims for additional taxes or assessments asserted by any such authority. The
provisions made for taxes in the Financial Statements are sufficient for the
payment of all unpaid federal, state, foreign and local taxes of the Company for
all periods prior to such date.
2.21 CORPORATE DOCUMENTS
The Company's Articles of Incorporation are, or at the time of Closing
will be, in the form attached hereto as Exhibit A. The Bylaws of the Company are
in the form attached hereto as Exhibit C.
2.22 MINUTES
The minutes of the Company reflect all meetings of directors and
shareholders since the time of the Company's continuance in the State of Wyoming
and reflect all transactions referred to in such minutes accurately in all
material respects.
2.23 ENVIRONMENTAL AND SAFETY LAWS
The Company is not in material violation of any applicable statute, law or
regulation relating to the environment, occupational health and safety,
sanitation, or public health, and, to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.
2.24 BROKERS OR FINDERS
The Company has not incurred and will not incur, directly or indirectly,
any liability for brokers' or finders' fees, agents' commissions or other
similar charges in connection with this Agreement or the transactions
contemplated herein.
2.25 OFFERING VALID
The offer, sale and issuance of the Series A Stock and the Conversion
Shares are exempt from the registration requirements of the applicable
Securities Laws, and are registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws and neither the Company nor
any agent on behalf of the Company has taken or will take any action hereafter
that would cause the loss of such exemption.
2.26 INSURANCE
The Company has in full force and effect fire and casualty insurance
policies, with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed and the Company has insurance against other hazards, risks and
liabilities to persons and properties to the extent and in the manner customary
for companies in a similar business and similarly situated.
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2.27 USE OF PROCEEDS
The Company will use the proceeds from the sale of the Series A Stock for
repayment of short-term debt in the principal amount of $260,000, capital
expenditures and general working capital.
2.28 CUSTOMERS AND SUPPLIERS
The Company believes that its relationships with its material customers
and suppliers are good.
2.29 DISCLOSURE
This Agreement, the Exhibits hereto and all other documents delivered by
the Company to the Investor or its attorneys or agents in connection herewith or
therewith do not contain any untrue statement of a material fact nor omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading. To the Company's knowledge, there are no facts that
(individually or in the aggregate) would materially adversely affect the
Condition of the Company that have not been set forth in this Agreement, the
Exhibits hereto or in other documents delivered to the Investors or its
attorneys or agents in connection herewith.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor herein represents and warrants for itself, that:
3.1 AUTHORIZATION
All acts necessary for the authorization, execution and delivery by the
Investor of this Agreement and the Investor Rights Agreement and the performance
of the obligations of the Investor hereunder and thereunder have been or will be
taken before the Closing. This Agreement and the Investor Rights Agreement have
been duly executed and delivered by the Investor and constitute valid and
legally binding obligations of the Investor, enforceable in accordance with
their terms, subject to (a) applicable bankruptcy, insolvency, reorganization,
or similar laws relating to or affecting the enforcement of creditors' rights;
(b) the availability of equitable remedies; and (c) the effect of public policy
on the indemnification provisions set forth in the Investor Rights Agreement.
The Investor has full power and authority to execute, deliver and perform its
obligations under this Agreement and the Investor Rights Agreement and to own
the Series A Stock and the Conversion Shares. The execution, delivery and
performance of this Agreement and the Investor Rights Agreement and the
consummation of the transactions contemplated herein and therein (including
ownership of the Series A Stock and the Conversion Shares) by the Investor do
not violate any provision of, or constitute a material breach of or default
under, any term, condition or provision of any agreement, indenture or other
instrument to which the Investor is a party, or by which it or its properties or
assets are bound, or of any order, judgment or decree against or binding upon
the Investor.
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3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT
This Agreement and the Investor Rights Agreement are made with the
Investor in reliance upon the Investor's representations to the Company
contained in this Section 3, which, by the Investor's execution of this
Agreement and the Investor Rights Agreement, the Investor herein confirms. The
Series A Stock and the Conversion Shares (collectively, the "Securities") will
be acquired for investment for the Investor's own account and not with a view to
the distribution of any part thereof, and the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
a manner contrary to the applicable Securities Laws, or applicable state
securities laws.
3.3 INVESTMENT EXPERIENCE
The Investor is an investor in securities of companies in the development
stage, qualifies as an "accredited investor" as defined in Rule 501 of
Regulation D promulgated by the SEC, and acknowledges that the Securities are a
speculative risk. The Investor is able to fend for itself in the transactions
contemplated by this Agreement and the Investor Rights Agreement, can bear the
economic risk of its investment (including possible complete loss of such
investment) for an indefinite period of time and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of its investment in the Securities. The Investor represents it
has not been organized for the purpose of acquiring the Securities. The Investor
understands that the Securities have not been registered under the applicable
Securities Laws, or under the securities laws of any jurisdiction, by reason of
reliance upon certain exemptions, and that the reliance of the Company on such
exemptions is predicated upon the accuracy of the Investor's representations and
warranties in this Section 3.
3.4 RESTRICTED SECURITIES
The Investor understands that the Securities are characterized as
"restricted securities" under the Securities Laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be
transferred or resold without registration under the applicable Securities Laws
only in certain limited circumstances and in accordance with the terms and
conditions set forth in the legend described in Subsection 3.5. In this
connection, the Investor represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the applicable Securities Laws.
3.5 LEGENDS
It is understood that the certificates evidencing the Securities may bear
the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE
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SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,
(ii) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF
THESE SECURITIES STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION OR
(iii) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION. AFTER THE PERIOD REQUIRED BY RULE 144(k) UNDER THE
ACT, THIS LEGEND WILL BE CANCELED, AND A CERTIFICATE FREE FROM SUCH LEGEND
ISSUED TO THE HOLDER HEREOF UPON COMPLIANCE WITH THE FOLLOWING CONDITIONS: (a)
SURRENDER OF THIS CERTIFICATE TO THIS CORPORATION IN THE MANNER AND AT THE PLACE
DESIGNATED FOR CANCELLATION, (b) A REPRESENTATION BY THE HOLDER THAT IT HAS
BENEFICIALLY HELD THE SECURITIES EVIDENCED BY THIS CERTIFICATE FOR NOT LESS THAN
THE PERIOD REQUIRED BY RULE 144(k) UNDER THE ACT, AND THAT IT IS NOT, AND HAS
NOT WITHIN THE PRECEDING 90 DAYS BEEN, AN "AFFILIATE" (AS THAT TERM IS DEFINED
FOR PURPOSES OF RULE 144 UNDER THE ACT OR ANY SUCCESSOR RULE) OF THIS
CORPORATION, AND (c) AN UNDERTAKING THAT IF AT ANY TIME THE HOLDER SHALL AGAIN
BECOME AN AFFILIATE OR OTHERWISE CEASE TO ENJOY FREE TRANSFERABILITY OF SUCH
SECURITIES UNDER RULE 144 EITHER BY REASON OF CHANGE OF CIRCUMSTANCE OR
AMENDMENT OF RULE 144, IT SHALL FORTHWITH SURRENDER ANY UNLEGENDED
CERTIFICATE(S) RECEIVED BY IT IN RESPECT OF THE SECURITIES EVIDENCED BY THIS
CERTIFICATE FOR IMPOSITION OF ANY APPROPRIATE LEGEND. THE FULL STATEMENT OF THE
POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF (THE
"STATEMENT OF RIGHTS AND PREFERENCES") OF THE SECURITIES IS SET FORTH IN THE
CERTIFICATE OF INCORPORATION OF THIS CORPORATION, AS AT ANY TIME AMENDED, AND
ANY EFFECTIVE STATEMENT OF RELATIVE RIGHTS AND PREFERENCES OF PREFERRED STOCK,
ON FILE IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF WYOMING. THIS
CORPORATION WILL FURNISH COPIES OF THE STATEMENT OF RIGHTS AND PREFERENCES TO
THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO
THIS CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
3.6 RESIDENCY
For purposes of the application of state securities laws, the Investor
represents that it is a resident of the State of Washington.
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4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING
The obligations of the Investor under paragraph (b) of Subsection 1.1 are
subject to the fulfillment at or before each Closing (unless otherwise
specified) of each of the following conditions, unless waived by the Investor:
4.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in Section 2
shall be true in all material respects on and as of each Closing with the same
effect as though such representations and warranties had been made as of the
date of each Closing, except to the extent of changes caused by the transactions
expressly contemplated herein.
4.2 PERFORMANCE
The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before each Closing.
4.3 COMPLIANCE CERTIFICATE
An authorized officer of the Company on behalf of the Company shall
deliver to the Investor at each Closing a certificate certifying that the
conditions specified in Subsections 4.1 and 4.2 have been fulfilled and stating
that there has been no material adverse change in the Condition of the Company
from the date of this Agreement to the time of the Closing.
4.4 INVESTOR RIGHTS AGREEMENT
The Company and the Investor shall have entered into the Investor Rights
Agreement.
4.5 AGREEMENT
The Company and the Investor shall have entered into the Agreement.
4.6 PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the transactions
contemplated at the Closing and all documents incident thereto, including
evidence of filing the Amendment with the Secretary of State of the State of
Wyoming, shall be reasonably satisfactory in form and substance to the
Investor's counsel.
4.7 OPINION OF COUNSEL
The Company shall have delivered to the Investor an opinion of counsel for
the Company, dated as of each Closing Date, in form and substance satisfactory
to the Investor.
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4.8 LEGAL EXPENSES
The Company shall have paid the reasonable legal fees and expenses of
Shartsis, Friese & Ginsburg LLP, up to a maximum of $10,000 for the First
Closing, and up to a maximum of $2,000 for all subsequent Closings, incurred in
connection with the transactions contemplated by this Agreement.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment on or before each Closing of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Investor contained in Section 3
shall be true in all material respects on and as of each Closing with the same
effect as though such representations and warranties had been made as of each
Closing.
5.2 PAYMENT OF PURCHASE PRICE
The Investor shall have delivered the portion of the purchase price
specified in paragraph (b) of Subsection 1.1 to be delivered at each Closing by
bank wire transfer to the Company's designated account.
5.3 SECURITIES LAWS QUALIFICATION
The offer and sale to the Investor of the Series A Stock shall be
qualified or exempt from qualification under all applicable Securities Laws and
state securities laws.
5.4 PERFORMANCE
The Investor shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before each Closing, including, without
limitation, the execution of this Agreement and the Investor Rights Agreement.
6. INDEMNIFICATION
6.1 INDEMNITY BY THE COMPANY
The Company, subject to the limitations set forth in Section 6.3,
covenants and agrees that it will indemnify and hold harmless the Investor and
its members, managers, stockholders, partners, officers, directors, employees,
affiliates and agents and their respective successors and assigns (collectively
the "Indemnitees"), from and after the date of this Agreement, against any and
all losses, damages, assessments, fines, penalties, adjustments, liabilities,
claims, deficiencies, costs, expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation) and
expenditures with respect to:
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(a) Any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant on the part of the Company pursuant to the terms of
the Related Documents or any misrepresentation in or omission from any Exhibit,
Schedule, list, certificate, or other instrument furnished or to be furnished by
the Company to the Investor pursuant to the terms of this Agreement, regardless
of whether, in the case of a breach of a representation or a warranty, the
Investor relied on the truth of such representation or warranty or had any
knowledge of any breach thereof; and
(b) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses incident to any of the foregoing or in
connection with the enforcement of rights hereunder.
6.2 NOTICE OF INDEMNITY CLAIM
(a) In the event that any claim ("Claim") is hereafter asserted
against or arises with respect to any Indemnitee as to which such Indemnitee may
be entitled to indemnification hereunder, the Indemnitee shall notify the
Company in writing (the "Claims Notice") of (i) receipt of written notice of
commencement of any third party litigation against such Indemnitee, within 5
business days after receipt of such written notice, or (ii) receipt by such
Indemnitee of written notice of any other third party claim pursuant to an
invoice, notice of claim or assessment, against such Indemnitee, within 10
business days after receipt of such written notice. The Claims Notice shall
describe the Claim and the specific facts and circumstances in reasonable
detail, and shall indicate the amount, if known, or an estimate, if possible, of
the losses that have been or may be incurred or suffered by the Indemnitee. The
failure to timely notify the Company in accordance with this Subsection 6.2(a)
shall not relieve the Company from the obligation to indemnify hereunder, except
to the extent that the Company establishes by competent evidence that it has
been prejudiced thereby.
(b) If, within 30 days of the Company's receipt of a Claims
Notice, the Company shall not have notified the Indemnitee of its election to
assume the defense, the Indemnitee shall have the right to assume control of the
defense and/or compromise of such Claim, and the costs and expenses of such
defense, including reasonable attorney's fees, shall be added to the Claim. If
the Indemnitee does not elect to assume the defense of any Claim, the Indemnitee
may give written notice within 20 days of such 30-day period to the Company of
its or his intent not to do so, in which event the Company shall assume control
of the defense and/or compromise of such Claim. Notwithstanding anything in this
Section 6 to the contrary, if the Company assumes the defense of any Claim, the
Indemnitee shall have the right to participate, at its or his expense, in the
defense against or compromise of such Claim.
(c) The party assuming the defense of any Claim shall keep the
other party reasonably informed at all times of the progress and development of
its or their defense of, and compromise efforts with respect to, such Claim and
shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other and make available to each
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other and their representatives all available relevant records or other
materials required by them for their use in defending, compromising or
contesting any Claim.
(d) If both the Indemnitee and the Company are named as defendants
in an action or proceeding initialed by a third party, they shall both be
represented by the same counsel, unless such counsel, the Indemnitee or the
Company shall determine that such counsel has a conflict of interest in
representing both the Indemnitee and the Company in the same action or
proceeding, and the Indemnitee and the Company do not waive such conflict to the
satisfaction of such counsel.
6.3 LIMITATIONS ON INVESTOR'S INDEMNITIES
The maximum amount which the Investor can recover as a result of this
Section 6 for Claims shall not in the aggregate exceed the Purchase Price paid
by the Investor plus any reasonable out-of-pocket costs or expenses incurred by
the Investor (including specifically, but without limitation, fines, penalties,
reasonable attorneys' fees and expenses of investigation). The Company shall not
be required to indemnify Investor for any claims made by Investor pursuant to
this Section 6 until the aggregate amount of all such claims exceeds $25,000.
7. COVENANTS
7.1 AFFIRMATIVE COVENANTS AND AGREEMENTS OF THE COMPANY
The Company covenants and agrees with Investor as follows:
(a) Reserve for Conversion Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, such number of Conversion Shares as shall be sufficient to enable it to
comply with its conversion obligations under the Amendment. If at any time the
number of Conversion Shares shall not be sufficient to effect the conversion of
the Series A Stock or otherwise to comply with the terms of the Amendment, the
Company will forthwith take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number as
will be sufficient for such purposes. The Company will obtain authorization,
consent, approval or other action by, or make any filing with, any
administrative body that may be required under applicable state securities laws
in connection with the issuance of Conversion Shares.
(b) Keeping of Records and Books of Account. The Company shall
keep, and cause each of its Subsidiaries to keep, adequate records and books of
account, in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied, reflecting all financial
transactions of the Company and each Subsidiary, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
(c) Financial Controls. The Company will maintain adequate
financial controls and reporting procedures applied on a consistent basis.
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(d) Notice of Confidential Information. The Company shall provide
to the Investor five (5) days' prior written notice of its intention to deliver
to the Investor information relating to the Company which is marked as
"confidential". If Investor notifies Company that it does not desire to receive
such "confidential" information, then the Company shall not deliver such
"confidential" information to the Investor.
7.2 COVENANTS AND AGREEMENTS OF INVESTOR
The Investor covenants with the Company as follows:
(a) Confidential Information. Subject to the Company's compliance
with the provision of Subsection 7.1(d) hereto, the Investor confirms,
acknowledges, and covenants that information which is marked "confidential," and
is received by it with respect to the Company pursuant to this Agreement, or
with respect to the transactions described herein, or in connection with the
participation by the Investor or its representative as a shareholder or member
of the Board of Directors of the Company, is and shall be confidential and for
the Investor's use only, and the Investor will not use such information in
violation of the Securities Laws, or any other laws, or reproduce, disclose or
disseminate such information to any other person (other than the Investor's
employees, directors or agents having a need to know the contents of such
information and the Investor's attorneys), except in connection with the
exercise of rights under this Agreement, unless the Company has made such
information available to the public generally, such information has otherwise
been made generally or publicly available, or the Investor is required to
disclose such information by a duly authorized governmental body. Company
acknowledges no information contained in the Related Documents is confidential.
Notwithstanding the foregoing, the Investor may, in its sole discretion, decline
to receive from the Company information which is marked "confidential", and as a
result thereof shall not be deemed to have received or have any knowledge of
such information marked "confidential", provided it has not received same. This
Subsection 7.2(a) shall not apply to the extent testimony is required by legal
process, provided that Investor shall provide at least 3 days' prior notice of
such proposed testimony or such lesser notice as the Investor shall have
received.
(b) Cooperation in Company Obligations. From and after the
Closing, the Investor shall take such action as may be reasonably required to
permit the Company to comply with its covenants as set forth in Subsection 7.1
of this Agreement.
8. MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES
The covenants contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing, and the
warranties and representations contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closings for
a period of two (2) years from the last Closing herewith.
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8.2 SUCCESSORS AND ASSIGNS
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
8.3 GOVERNING LAW; JURISDICTION AND VENUE
This Agreement shall be governed by and construed under the laws of the
State of Washington without regard to conflicts of law principles. The parties
hereto agree that venue for any dispute hereunder, or action on any obligation
under this Agreement, shall be in Spokane County, Washington, and the parties
hereto submit to the jurisdiction of the courts of the State of Washington for
any dispute hereunder or action or obligation under this Agreement.
8.4 TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are for convenience only
and are not to be considered in construing or interpreting this Agreement.
8.5 NOTICES
Unless otherwise provided, any notice or consent required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given and received upon personal delivery to the party to be notified (including
via facsimile transmission), within three (3) days after deposit with the United
States Post Office, postage prepaid, registered or certified with return receipt
requested or within one (1) day after deposit with an overnight courier service
and addressed to the party to be notified at the address indicated below, or at
such other address as such party may designate by ten (10) days' advance written
notice to the other parties given in the foregoing manner.
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COMPANY: INVESTOR:
SOLIGEN TECHNOLOGIES, INC. KOYAH LEVERAGE PARTNERS, L.P.
19408 Londelius 601 W. Main Ave., Suite 600
Northridge, CA 91324 Spokane, Washington 99201-0613
Attn: President Attn: Jim Simmons
Fax: 818-718-1221 Fax (509) 623-0588
KOYAH PARTNERS, L.P.
601 W. Main Ave., Suite 600
Spokane, Washington 99201-0613
Attn: Jim Simmons
Fax (509) 623-0588
For any notice delivered to the Company, a copy shall be also delivered
to:
Bruce A. Robertson
Garvey, Schubert & Barer
1191 Second Avenue, 18th Floor
Seattle, Washington, 98101-2939
Fax: (206) 464-0125.
For any notice delivered to the Investor, a copy shall also be delivered
to:
Eric M. Sipple
Shartsis, Friese & Ginsburg, LLP
Eighteenth Floor
One Maritime Plaza
San Francisco, California 94111
Fax: (415) 421-2922
8.6 FINDER'S FEES
The Company acknowledges that the Investor is not responsible for any
finder's fee that the Company may be obligated to pay upon completion of this
transaction. The Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.7 AMENDMENTS AND WAIVERS
After the Closing, any term of this Agreement may be amended, and the
observance of any term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the Investor.
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8.8 SEVERABILITY
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.9 ENTIRE AGREEMENT
This Agreement (including all Exhibits and Schedules) and the other
documents delivered at the Closing constitute the full and entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements with respect to the subject matter hereof.
8.10 EXPENSES
(a) Subject to Section 4.8 hereof, each party hereto will pay its
own fees and expenses incurred in connection with the transactions contemplated
hereby, whether or not such transactions shall be consummated.
8.11 FURTHER ASSURANCES
Each party shall execute such other and further certificates, instruments
and other documents as may be necessary and proper to implement, complete and
perfect the transactions contemplated by this Agreement.
8.12 COUNTERPARTS -- FACSIMILE SIGNATURES.
(a) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement shall be considered duly
executed and delivered by a party hereto when an electronic facsimile
transmission of the signature page hereto and purporting to reflect the
execution of such signature page by a representative of such party shall have
been delivered by such party to the other parties hereto. Each party hereto
agrees that if it executes this Agreement by delivery of a facsimile
transmission of the signature pages as provided in the preceding sentence, it
will thereafter deliver to each of the parties hereto duly executed original
counterparts of such signature pages.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
SOLIGEN TECHNOLOGIES, INC.
By:_____________________________________
Title:__________________________________
INVESTOR:
KOYAH LEVERAGE PARTNERS, L.P.
By:_____________________________________
Title:__________________________________
KOYAH PARTNERS, L.P.
By:_____________________________________
Title:__________________________________
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<PAGE> 1
EXHIBIT 4.4
SOLIGEN TECHNOLOGIES, INC.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (the "Agreement") is made as of April 24,
1998, by and among Soligen Technologies, Inc., a Wyoming corporation (the
"Company"), and Koyah Leverage Partners, L.P., a Delaware limited partnership,
and Koyah Partners, L.P., a Delaware limited partnership, (Koyah Leverage
Partners, L.P. and Koyah Partners, L.P. are collectively referred to herein as
the "Investor").
RECITALS
A. The Investor is purchasing up to 3,000 shares of the Company's
Series A Convertible Preferred Stock (the "Series A Stock") pursuant to that
certain Series A Convertible Preferred Stock Purchase Agreement, dated as of the
date hereof, between the Company and the Investor (the "Series A Purchase
Agreement").
B. It is a condition to the obligations of the Investor under the
Series A Purchase Agreement that this Agreement be executed by the parties
hereto, and the parties are willing to execute, and to be bound by the
provisions of, this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
(a) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(b) "Convertible Securities" shall mean securities of the Company
convertible into or exchangeable for Common Stock of the Company or into other
securities that are convertible into or exchangeable for Common Stock.
(c) "Holder" shall mean any holder of outstanding Registrable Securities
which have not been sold to the public, but only if such holder is the Investor
or an assignee or transferee of registration rights as permitted by Section 10.
(d) The terms "Register", "Registered", and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("Registration Statement"), and the
declaration or ordering of the effectiveness of such Registration Statement.
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(e) "Registrable Securities" shall mean all Common Stock not previously
sold to the public and issued or issuable upon conversion or exercise of any of
the Company's Convertible Securities purchased by or issued to the Investor,
including Common Stock issued pursuant to stock splits, stock dividends and
similar distributions; provided, however, that shares of Common Stock or other
securities shall cease to be treated as Registrable Securities at such time as
they (i) have been sold pursuant to an effective Registration Statement under
the Securities Act or (ii) have otherwise been sold or transferred to or through
a broker, dealer or underwriter in a public distribution or a public securities
transaction.
(f) "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 3 of this Agreement, including, without
limitation, all federal and state registration, qualification, and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, and the expense of any special audits incident to or required
by any such Registration.
(g) "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
(h) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities pursuant to this
Agreement.
2. RIGHT OF FIRST REFUSAL
(a) The Company hereby grants to the Investor the right of first refusal
to purchase up to its Pro Rata Share of any New Securities (as defined below)
that the Company may, from time to time, propose to sell and issue. The Investor
may purchase New Securities on the same terms and at the same price at which the
Company proposes to sell the New Securities. The "Pro Rata Share" of the
Investor, for purposes of this right of first refusal, is the ratio of (a) the
total number of shares of Common Stock held by the Investor (including any
shares of Common Stock into which shares of Convertible Securities held by the
Investor are convertible) to (b) the total number of shares of Common Stock
outstanding (including any shares of Common Stock into which outstanding shares
of Convertible Securities are convertible). Each Investor shall have the right
of over-allotment such that if any Investor fails to exercise its rights
hereunder to purchase its full portion of its Pro Rata Share of New Securities,
the other Investor may, within five (5) days from the date such non-purchasing
Investor fails to purchase its full Pro Rata Share hereunder, purchase all or
any portion of the non-purchasing Investor's Pro Rata Share of New Securities
which is not purchased.
(b) "New Securities" shall mean any capital stock of the Company,
whether authorized or not, and any rights, options, or warrants to purchase said
capital stock, and securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided, that "New Securities" shall not
include (a) securities issuable upon conversion of the Convertible Securities,
(b) securities issued pursuant to the acquisition of another corporation by the
Company by merger, purchase of all or substantially all of the assets, or other
reorganization, if approved by the Company's Board of Directors, (c) shares
issued or issuable to employees, directors or consultants pursuant to the
Company's 1993 Stock Option Plan, as amended,
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(d) shares issued without consideration pursuant to a stock dividend, stock
split, or similar transaction, (e) shares issued pursuant to the exercise of
warrants and options outstanding as of the date of this Agreement, and (f)
securities, options or warrants issued to employees, directors or consultants as
compensation for services rendered to the Company (other than in connection with
an equity or debt financing) and approved by the Company's Board of Directors.
(c) If the Company proposes to undertake an issuance of New Securities,
it shall give to the Investor written notice (the "Notice") of its intention,
describing the type of New Securities, the price, the terms upon which the
Company proposes to issue the same, the number of shares that the Company
proposes to issue and the number of shares that the Investor is entitled to
purchase, and a statement that the Investor shall have twenty (20) days to
respond to such Notice. The Investor shall have twenty (20) days from the date
of receipt of the Notice to agree to purchase any or all of its Pro Rata Share
of the New Securities for the price and upon the terms specified in the Notice
by giving written notice to the Company and stating therein the quantity of New
Securities to be purchased and forwarding payment for such New Securities to the
Company if immediate payment is required by such terms.
(d) If the Investor fails to exercise in full the right of first refusal
within said twenty (20) day period and after the expiration of the 5-day period
for the exercise of the over-allotment provisions of this Section 2, the Company
shall have ninety (90) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within thirty (30) days from the date of said agreement) to sell the
New Securities respecting which the Investor's rights were not exercised, at a
price not less than and upon general terms no more favorable to the purchaser
thereof than specified in the Notice. If the Company has not sold the New
Securities within said ninety (90) day period (or sold and issued New Securities
in accordance with the foregoing within thirty (30) days from the date of said
agreement), the right of first refusal provided hereunder shall be revived and
the Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Investor in the manner provided above.
(e) The covenants of the Company set forth in this Section 2 shall be
terminated and be of no further force or effect immediately prior to the closing
of the first public offering of the Common Stock of the Company effected
pursuant to a Registration Statement filed with, and declared effective by, the
Commission under the Securities Act, that results in gross offering proceeds of
at least Ten Million Dollars ($10,000,000) at a per share price of at least One
Dollar ($1.00) subject to proportional adjustment for stock splits, dividends,
consolidations, recapitalizations, and similar events.
3. PIGGYBACK REGISTRATION
(a) Notice of Piggyback Registration and Inclusion of Registrable
Securities
Subject to the terms of this Agreement, if the Company proposes to
Register any of its Common Stock for its own account or the account of a
security holder or holders exercising demand Registration rights on a form that
would be suitable for a Registration involving solely Registrable Securities,
the Company will: (a) promptly give each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify
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such securities under the applicable Blue Sky or other state securities laws) at
least thirty (30) days prior to the proposed filing date of a Registration
Statement and offer such Holder the opportunity to Register all or a portion of
its Registrable Securities in such offering and (b) include in such Registration
(and any related qualification under Blue Sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request delivered to the Company by any Holder within twenty (20) days
after delivery of such written notice from the Company.
(b) Underwriting in Piggyback Registration
(i) Notice of Underwriting in Piggyback Registration
If the Registration of which the Company gives notice is for a Registered
public offering involving an underwriting, the Company shall so advise the
Holders as a part of the written notice given pursuant to Subsection 3(a). In
such event, the right of any Holder to Registration shall be conditioned upon
such underwriting and the inclusion of such Holder's Registrable Securities in
such underwriting to the extent provided in this Section 3. All Holders
proposing to distribute their Registrable Securities through such underwriting
shall (together with the Company and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter's representative for such offering.
(ii) Marketing Limitation in Piggyback Registration
If the underwriter's representative advises the Company and the Holders
seeking Registration of Registrable Securities pursuant to Section 3 in writing
that market factors (including, without limitation, the aggregate number of
shares of Common Stock requested to be Registered, the general condition of the
market, and the status of the persons proposing to sell securities pursuant to
the Registration) require a limitation of the number of shares to be
underwritten, then the underwriter's representative (subject to the allocation
priority set forth in Subsection 3(b)(iii)) may limit the number of shares of
Registrable Securities to be included in such Registration and underwriting to
not less than twenty-five percent (25%) of the securities included in such
Registration (based on aggregate market values).
(iii) Allocation of Shares in Piggyback Registration
If the underwriter's representative limits the number of shares to be
included in a Registration pursuant to Subsection 3(b)(ii), the number of shares
to be included in such Registration shall be allocated (subject to Section 3) in
the following manner: The shares (other than Registrable Securities) held by
officers or directors of the Company shall be excluded from such Registration
and underwriting to the extent required by such limitation. If a limitation of
the number of shares is still required after such exclusion, the number of
shares that may be included in the Registration and underwriting by selling
shareholders shall be allocated among all other holders thereof, in proportion,
as nearly as practicable, to the respective amounts of securities (including
Registrable Securities) which such holders would otherwise be entitled to
include in such Registration. No Registrable Securities or other securities
excluded from the underwriting by reason of this Section 3 shall be included in
the Registration Statement.
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(iv) Withdrawal in Piggyback Registration
If any Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
underwriter delivered prior to the effective date of the Registration Statement.
Any Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such Registration. If Registrable
Securities or other securities are so withdrawn from the Registration and the
number of shares of Registrable Securities to be included in such Registration
was previously reduced as a result of marketing factors, then the Company shall
offer to all persons who have retained the right to include Registrable
Securities or other securities in the Registration the right to include
additional Registrable Securities or other securities in the Registration in an
aggregate amount equal to the number of shares so withdrawn, with such shares to
be allocated among the persons requesting additional inclusion pro rata
according to the total amount of Registrable Securities or other securities
entitled to be included in such Registration owned by each such person or in
such other proportions as shall be mutually agreed by such selling stockholders.
4. EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with an aggregate of two
(2) Registrations pursuant to Section 3 shall be borne by the Company. All
Selling Expenses shall be borne by the holders of the securities Registered pro
rata on the basis of the number of shares Registered.
5. REGISTRATION PROCEDURES AND OBLIGATIONS
(a) Company's Obligations
Whenever required under this Agreement to effect the Registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities and use its best efforts to cause
such Registration Statement to become effective, and, upon the request of the
holders of a majority of the securities Registered thereunder, keep such
Registration Statement effective for up to one hundred twenty (120) days;
provided, however, that (i) such 120-day period shall be extended for a period
of time equal to the period the Holder refrains from selling any securities
included in such Registration at the request of an underwriter of Common Stock
(or other securities) of the Company.
(ii) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(iii) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other
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documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.
(iv) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith, or as a
condition thereto, to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(v) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(vi) Notify each Holder of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
(vii) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(viii) Provide a transfer agent and registrar for all Registrable
Securities Registered pursuant to such Registration Statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such Registration.
(b) Information Furnished by Holder
It shall be a condition precedent of the Company's obligations under this
Agreement that each Holder of Registrable Securities included in any
Registration furnish to the Company such information regarding such Holder and
the distribution proposed by such Holder or Holders as the Company may
reasonably request.
6. TERMINATION OF RIGHTS
The rights of any particular Holder to cause the Company to Register
securities under Section 3 shall terminate with respect to such Holder on the
date on which all of such Holder's Registrable Securities can be sold without
volume restrictions under Rule 144 promulgated under the Securities Act ("Rule
144").
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7. INDEMNIFICATION
(a) Company's Indemnification of Holders
To the extent permitted by law, the Company will indemnify each Holder,
and each of its officers, directors, and partners, and each person, if any, who
controls such Holder within the meaning of the Securities Act, with respect to
which Registration, qualification or compliance of registrable securities has
been effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages, or
liabilities (or actions in respect thereof) to the extent such claims, losses,
damages, or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or
other document (including any related Registration Statement) incident to any
such Registration, qualification, or compliance, or are based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in light of
the circumstances under which they were made, or any violation (or alleged
violation) by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such Registration, qualification,
or compliance; and the Company will reimburse each such Holder, underwriter, and
each person who controls any such Holder or underwriter, for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action; provided, however, that the
indemnity contained in this Section 7 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if settlement
is effected without the consent of the Company (which consent shall not
unreasonably be withheld); provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based upon any untrue statement or
omission based upon written information furnished to the Company by such Holder
or persons on behalf of such Holder, underwriter, or controlling person and
stated to be for use in connection with the offering of securities of the
Company; provided, further, that this indemnity agreement with respect to a
preliminary prospectus shall not inure to the benefit of any Holder from whom
the person asserting any such losses, liabilities, claims, damages or expenses
purchased Registrable Securities, or any person controlling such Holder, if a
copy of the prospectus (as amended or supplemented at the time of sale) was not
sent or given by or on behalf of the Holder to such person and if the prospectus
(as so amended or supplemented) would have corrected the defect giving rise to
such loss, liability, claim, damage or expense.
(b) Holder's Indemnification of Company
To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which
Registration, qualification, or compliance is being effected pursuant to this
Agreement, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors, and partners, and each person controlling such other Holder, against
all claims, losses, damages, and liabilities (or actions in respect thereof)
arising out of or based upon any untrue statement (or alleged untrue statement)
of a material fact contained in any such Registration Statement, prospectus,
offering
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circular, or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances under which
they were made, and will reimburse the Company, such Holders, such directors,
officers, partners, persons, underwriters or control persons for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in each case to
the extent, but in each case only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
Registration Statement, prospectus, offering circular, or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use in connection with
the offering of securities of the Company; provided, however, that the indemnity
contained in this Section 7 shall not apply to amounts paid in settlement of any
such claim, loss, damage, liability or action if settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld)
and provided, further, that each Holder's liability under this Section 7 shall
not exceed such Holder's proceeds from the offering of securities made in
connection with such Registration.
(c) Indemnification Procedure
Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof
and generally summarize such action. The indemnifying party shall have the right
to participate in and to assume the defense of such claim; provided, however,
that the indemnifying party shall be entitled to select counsel for the defense
of such claim with the approval of any parties entitled to indemnification,
which approval shall not be unreasonably withheld; provided further, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 7, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 7.
(d) Contribution
If the indemnification provided for in this Section 7 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim damage, or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the
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indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
8. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934
With a view to making available to the Holders the benefits of Rule 144
and any other rule or regulation of the Commission that may at any time permit a
Holder to sell securities of the Company to the public without Registration, the
Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days after
the effective date of the first Registration Statement filed by the Company for
the offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
(c) Furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith on request (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144 (at any time after
ninety (90) days after the effective date of the first Registration Statement
filed by the Company), the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
Commission which permits the selling of any such securities without Registration
or pursuant to such form.
9. MARKET STAND-OFF
Each Holder hereby agrees that, if so requested by the Company and the
underwriter's representative (if any) in connection with the Company's initial
public offering, such Holder shall not sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company without the prior
written consent of the Company and the underwriter's representative for such
period of time (not to exceed 180 days) following the effective date of a
Registration Statement of the Company filed under the Securities Act as may be
requested by the underwriter's representative. The obligations of Holders under
this Section 9 shall be conditioned (i) upon similar agreements being in effect
with each other shareholder who is an officer, director, or 5% shareholder of
the Company, (ii) if marketing limitations are sought by the underwriter's
representative, upon imposition of marketing limitations no more extensive than
those described in Subsection 3(b)(ii), and (iii) upon Holder participating in
such initial public offering pursuant to Section 3 of
9
<PAGE> 10
this Agreement. Notwithstanding the foregoing, the obligations described in this
Section 9 shall not apply to a Registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar forms which may be promulgated in the
future, or a Registration relating solely to a Rule 145 transaction on form S-4
or similar forms which may be promulgated in the future. The Company hereby
agrees that it shall not issue any shares of its capital stock or subscriptions,
options, conversion rights, warrants or other agreements, securities or
commitments obligating the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of the Company's capital stock or any
securities convertible into or exchangeable for shares of the Company's capital
stock or obligating the Company to grant, extend or enter into any such
agreement or commitment (each an "Option"), unless the holder of such shares or
Options agrees to enter into an agreement substantially similar to this Section
9; provided however, that the foregoing obligation shall not apply to Options
granted under the Company's 1993 Stock Option Plan as amended.
10. TRANSFER OF RIGHTS
The right of first refusal and the right to cause the Company to Register
securities granted by the Company to the Investor under this Agreement may be
assigned by any Holder to a transferee or assignee of any Convertible Securities
or Registrable Securities not sold to the public acquiring at least twenty
percent (20%) of such Holder's Registrable Securities; provided, however, that
the Company must receive written notice within ten days after said transfer,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such Registration rights are being assigned.
11. MISCELLANEOUS
(a) No Conflicts
The parties hereto represent that they are not parties to and do not know
of any other agreements that conflict with any of the provisions of this
Agreement.
(b) Entire Agreement; Successors
This Agreement constitutes the entire contract between the parties hereto
relative to the subject matter hereof. Except as otherwise set forth herein, the
provisions of this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the parties hereto, including any successors
in interest to or transferees or assignees of any shares of capital stock of the
Company.
(c) Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement shall be considered duly executed and
delivered by a party hereto when an electronic facsimile transmission of the
signature page hereto and purporting to reflect the execution of such signature
page by a representative of such party shall have been delivered by such party
to the other parties hereto. Each party hereto agrees that if it executes this
Agreement by delivery
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<PAGE> 11
of a facsimile transmission of the signature pages as provided in the preceding
sentence, it will thereafter deliver to each of the parties hereto duly executed
original counterparts of such signature pages.
(d) Modification
This Agreement shall not be subject to modification or amendment in any
respect, except by an instrument in writing signed by (a) the Company and (b)
the Holders of not less than fifty percent (50%) of the Registrable Securities.
(e) Applicable Law; Jurisdiction and Venue
This Agreement shall for all purposes be governed by and construed in
accordance with the laws of the State of Washington without regard to its
conflicts of law principles. The parties hereto agree that venue for any dispute
hereunder, or action on any obligation under this Agreement, shall be in Spokane
County, Washington, and the parties hereto submit to the jurisdiction of the
courts of the State of Washington for any dispute hereunder or action or
obligation under this Agreement.
(f) Notices
All notices, demands or other communications desired or required to be
given by any party to any other party hereto shall be in writing and shall be
deemed effectively given and received (a) upon personal delivery (including via
facsimile transmission), (b) the next business day after deposit for next-day
delivery with a nationally-recognized overnight delivery service, charges and
postage prepaid, (c) three (3) days after deposit with the United States Post
Office registered or certified, return receipt requested, postage prepaid,
addressed: (i) if to the Company, to the address specified on the signature page
hereto; (ii) if to the Investor, to the address specified on the signature page
hereto; or (iii) to such other addresses and to the attention of such other
individuals as the Company or the Investor shall have designated in writing to
the other parties.
For any notice delivered to the Company, a copy shall be also delivered
to:
Bruce A. Robertson
Garvey, Schubert & Barer
1191 Second Avenue, 18th Floor
Seattle, Washington 98101-2939
Fax: (206) 464-0125.
For any notice delivered to the Investor, a copy shall be also delivered
to:
Eric M. Sippel
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, Eighteenth Floor
San Francisco, California 94111
Fax: (415) 421-2922
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<PAGE> 12
(g) Severability
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provisions shall be excluded from this Agreement and
the balance of this Agreement shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its terms.
(h) Specific Performance and Expenses
Each of the parties to this Agreement agrees that the other parties to
this Agreement will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any party to this Agreement, the parties to this
Agreement shall, in addition to all other remedies, each be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
(i) Further Assurances.
Each party shall execute such other and further certificates, instruments
and other documents as may be necessary and proper to implement, complete and
perfect the transactions contemplated by this Agreement.
[Remainder of this page intentionally left blank.]
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day first above written.
COMPANY:
SOLIGEN TECHNOLOGIES, INC.
By: ____________________________________
Address: 19408 Londelius
Northridge, California 91324
Fax: (818) 718-1221
Attn: President
INVESTOR:
KOYAH LEVERAGE PARTNERS, L.P.
By:_____________________________________
Title:__________________________________
601 W. Main Ave., Suite 600
Spokane, Washington 99201-0613
Fax: (509) 623-0588
Attn: Jim Simmons
KOYAH PARTNERS, L.P.
By:_____________________________________
Title:__________________________________
601 W. Main Ave., Suite 600
Spokane, Washington 99201-0613
Fax: (509) 623-0588
Attn: Jim Simmons
13
<PAGE> 1
EXHIBIT 4.5
FIRST AMENDMENT TO ESCROW AGREEMENT
THIS FIRST AMENDMENT TO ESCROW AGREEMENT is entered into effective March
25, 1998, in order to amend that certain Escrow Agreement, dated November 4,
1992 (the "Escrow Agreement"), among Pacific Corporate Trust Company (the
"Escrow Agent"), Soligen Technologies, Inc. (the "Company"), and Yehoram Uziel,
Adam L. Cohen, Charles Lewis, Massachusetts Institute of Technology and Chelsea
Capital Corporation (individually referred to as "Shareholder"). (All Shares
previously held by Adam L. Cohen have been transferred to Yehoram Uziel, and
therefore Mr. Cohen is not a party to this agreement).
1. Paragraphs 7 and 8 of the Escrow Agreement are hereby deleted in their
entirety and replaced by the following new paragraph 7:
"7. RELEASE FROM ESCROW
7.1 The Shareholder irrevocably directs the Escrow Agent to retain the
Shares until the Shares are released from escrow pursuant to subsection
7.2.
7.2 The Escrow Agent will not release the Shares from escrow until the
earlier of:
(i) the date(s) upon which the Escrow Agent has received a letter
from the Superintendent or the Exchange consenting to the release,
which release shall be based on the Earn-out Formula provided in
Schedule "B" attached hereto and which release shall be in
accordance with and governed by the provisions contained in Local
Policy Statement 3-07 and the rules of the Exchange; or
(ii) November 3, 2002 at which time any Shares remaining in escrow
shall be released.
7.3 The approval of the Superintendent or the Exchange to a release from
escrow of any of the Shares shall terminate this Agreement only in respect
of the Shares so released."
2. Paragraphs in the Escrow Agreement subsequent to the above-stated new
paragraph 7 shall be renumbered to reflect the foregoing amendment.
3. Except as set forth herein, the Escrow Agreement shall continue in full
force and effect in accordance with its terms.
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<PAGE> 2
The Parties have executed and delivered this Agreement as of the date of
reference of this Agreement.
THE COMMON SEAL OF PACIFIC )
CORPORATE TRUST COMPANY was )
hereunder affixed in the presence of: )
)
- -------------------------------------- )
Authorized Signatory ) C/S
)
- -------------------------------------- )
Authorized Signatory )
THE COMMON SEAL OF SOLIGEN )
TECHNOLOGIES, INC. (FORMERLY WDF )
CAPITAL CORP.) was hereunto affixed in )
the presence of: )
- -------------------------------------- )
Authorized Signatory ) C/S
)
- -------------------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED by )
YEHORAM UZIEL in the presence of: )
- -------------------------------------- )
Name )
- -------------------------------------- ) --------------------------------------
Address ) Yehoram Uziel
- -------------------------------------- )
City/State (Zip) )
- -------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
CHARLES LEWIS in the presence of: )
)
- -------------------------------------- )
Name ) --------------------------------------
- -------------------------------------- ) Charles Lewis
Address )
- -------------------------------------- )
City/State (Zip) )
- -------------------------------------- )
Occupation )
- 2 -
<PAGE> 3
MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
BY:
- -------------------------------------
Name
- -------------------------------------
Title
THE COMMON SEAL OF CHELSEA
CAPITAL CORPORATION was hereunto
affixed in the presence of:
- ------------------------------------- )
Authorized Signatory ) C/S
)
- ------------------------------------- )
Authorized Signatory )
- 3 -
