-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RCVYIGPN2FL00IZcbXrWdZJ8dlYje+q5Vqf50YpiOzoU97dIBpTyoLQ/GZlomxBe zxk1BM1OJkmIOWJl3d2FWw== 0001017062-97-002134.txt : 19971127 0001017062-97-002134.hdr.sgml : 19971127 ACCESSION NUMBER: 0001017062-97-002134 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19971126 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HELISYS INC CENTRAL INDEX KEY: 0001003641 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 954552813 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-49453 FILM NUMBER: 97729110 BUSINESS ADDRESS: STREET 1: 24015 GARNIER ST CITY: TORRANCE STATE: CA ZIP: 90505 BUSINESS PHONE: 3108910600 MAIL ADDRESS: STREET 1: 24015 GARNIER STREET CITY: TORRANCE STATE: CA ZIP: 90505 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CRUTTENDEN WALTER W III CENTRAL INDEX KEY: 0001032005 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 548745260 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 18301 VONKKARMAN AVENUE CITY: IRVINE STATE: CA ZIP: 92612-1009 BUSINESS PHONE: 7147575700 MAIL ADDRESS: STREET 1: 18301 VON KARMAN AVENUE CITY: IRVINE STATE: CA ZIP: 92612-1009 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)* HELISYS, INC. (Name of Issuer) COMMON STOCK, $.001 PAR VALUE (Title of Class of Securities) 423 282 (CUSIP Number) WALTER W. CRUTTENDEN, III C/O CRUTTENDEN ROTH INCORPORATED 18301 VON KARMAN AVENUE IRVINE, CALIFORNIA 92715 (714) 757-5700 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) NOVEMBER 18, 1997 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ] NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ----------------------- --------------------- CUSIP NO. 423 2822 SCHEDULE 13D PAGE 2 OF 6 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (Entities Only) Walter W. Cruttenden, III - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 BK - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO 5 ITEMS 2(d) or 2(e) [_] - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 567,000 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 -0- OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 567,000 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 -0- - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 567,000 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 14% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 IN - ------------------------------------------------------------------------------ ITEM 1. Security and Issuer. - ------- ------------------- This Statement relates to the common stock, par value $0.001 per share (the "Common Stock"), of Helisys, Inc., a Delaware corporation (the "Company"), including the Common Stock issuable upon the conversion of outstanding Series A Convertible Preferred Stock, par value $0.001 per share (the "Series A Stock") and the Common Stock issuable upon the exercise of outstanding warrants beneficially owned by the Reporting Person (as defined in Item 2 below). In accordance with Rule 13d-3(d)(1)(i) promulgated under the Act, the shares of Common Stock issuable upon the conversion of the Series A Stock and the exercise of the warrants have been treated, for the purposes of this filing, as Common Stock beneficially owned by the Reporting Person (as defined in Item 2 below). The Company's principal executive offices are located at 24015 Garnier Street, Torrance, California 90505-5319. ITEM 2. Identity and Background. - ------- ----------------------- This statement is filed by Walter W. Cruttenden, III ("Cruttenden" or the "Reporting Person"). Cruttenden is a natural person and a citizen of the United States. Cruttenden's business address is c/o Cruttenden Roth Incorporated, 18301 Von Karman Avenue, Irvine, California 92715. See Item 6, "Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer," below for a description of the Reporting Person's relationships with Cruttenden Roth Incorporated and the Company. The Reporting Person has not, during the last five (5) years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. ITEM 3. Source and Amount of Funds or Other Consideration. - ------- ------------------------------------------------- On November 18, 1997 Cruttenden entered into a Preferred Stock Purchase Agreement (the "Purchase Agreement") pursuant to which he acquired an aggregate of 80,000 shares of the Company's Series A Stock at a purchase price of $6.25 per share, or $500,000 in the aggregate. The 80,000 shares of Series A Stock are currently convertible into 400,000 shares of Common Stock. Cruttenden owned 67,500 shares of Common Stock in his personal investment account prior to this transaction. At closing, an aggregate of $300,000 was paid to the Company in cash, and a promissory note in the principal amount of $200,000, payable by the Company to Cruttenden, was cancelled and the principal amount thereof was applied to the purchase price of the Series A Stock. A copy of the Purchase Agreement is filed herewith as Exhibit 1 and is incorporated herein by this reference. The source of Cruttenden's funds 3 in this transaction was partially a bank borrowing by Cruttenden from Comerica Bank-California ("Comerica"). Pursuant to the Purchase Agreement, Cruttenden also acquired a warrant (the "Warrant") to purchase 100,000 shares of Common Stock, convertible at any time prior to its expiration on November 18, 2002, which is exercisable at $1.75 per share. A copy of the Warrant is filed herewith as Exhibit 2 and is incorporated herein by this reference. The Warrant was issued to Cruttenden in consideration of his guaranty of the Company's obligation to pay Comerica $500,000 pursuant to a loan agreement between the Company and Comerica. In consideration of Cruttenden's guaranty, the Company also paid Cruttenden $10,000. Pursuant to the Purchase Agreement, the Company has agreed to issue warrants to purchase an additional 10,000 shares of Common Stock to Cruttenden for each $100,000 that the Company actually borrows from Comerica, provided Cruttenden's guaranty therefor shall, at the time of such borrowing, still be in full force and effect. ITEM 4. Purpose of Transaction. - ------- ---------------------- Cruttenden acquired the Series A Stock and the Warrants for investment purposes and to assist the Company with its cash needs. Pursuant to the Purchase Agreement, Cruttenden has acknowledged that he does not have any preemptive or similar rights to purchase any additional shares of Series A Stock. The rights, preferences and privileges of the Series A Stock are as set forth in the Certificate of Designations, Preferences and Rights filed by the Company with the Delaware Secretary of State on November 17, 1997, a copy of which is filed herewith as Exhibit 3 and incorporated herein by this reference. The Warrant includes provisions protecting against certain dilution events. Reference is made to Section 5, "Adjustments," of the Warrant, filed as Exhibit 2 hereto. ITEM 5. Interest in Securities of the Issuer. - ------- ------------------------------------ The Reporting Person has sole voting and dispositive power with respect to the Series A Stock, and the underlying shares of Common Stock, and has sole dispositive power with respect to the Warrant and sole voting and dispositive power with respect to the shares of Common Stock that may be acquired upon exercise of the Warrant. No person other than the Reporting Person has the right to receive or the power to direct receipt of dividends or the proceeds of sale of the shares of Series A Stock and of the underlying Common Stock, and of the Warrant. 4 ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect - ------- --------------------------------------------------------------------- to Securities of the Issuer. --------------------------- The Reporting Person is an officer and principal stockholder of Cruttenden Roth Incorporated ("CRI"). CRI served as underwriters of the Company's initial public offering of Common Stock. On September 10, 1997, CRI entered into a Letter Agreement with the Company pursuant to which CRI was engaged by the Company as an advisor to assist the Company in evaluating possible strategic transactions. Such Letter Agreement, as supplemented on November 18, 1997, provides that the Company will not consummate a transaction with any third party unless such third party agrees to assume the Company's obligations to Reporting Person pursuant to the terms of the Purchase Agreement and related documents. Pursuant to the Warrant, the Company irrevocably granted and issued to the Reporting Person the right and option to sell to the Company (the "Put") the Warrant during the "Put Exercise Period" (defined in Section 6, "Put Agreement," in the Warrant, filed as Exhibit 2 hereto and incorporated herein by this reference) at a purchase price equal to $1.50 per each unissued warrant share.
ITEM 7. Materials to be Filed as Exhibits. - --------- ------------------------------------------------- Exhibit 1 Preferred Stock Purchase Agreement dated November 18, 1997 by and between Helisys, Inc. and Walter W. Cruttenden, III Exhibit 2 Warrant to Purchase 100,000 shares of Common Stock of Helisys, Inc. dated November 18, 1997, issued to Walter W. Cruttenden, III Exhibit 3 Certificate of Designations, Preferences and Rights setting forth the rights, preferences and privileges of the Helisys, Inc. Series A Convertible Preferred Stock, as filed with the Delaware Secretary of State on November 17, 1997
5 SIGNATURE --------- After reasonable inquiry and to the best of such person's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: November 25, 1997 /s/ Walter W. Cruttenden, III ------------------------------------------- Walter W. Cruttenden, III 6 EX-1 2 PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 1 HELISYS, INC. PREFERRED STOCK PURCHASE AGREEMENT This Preferred Stock Purchase Agreement (this "Agreement") is made as of November 18, 1997, by and between HELISYS, INC., a Delaware corporation (the "Company"), and WALTER W. CRUTTENDEN, III (the "Purchaser"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. PURCHASE AND SALE OF STOCK. -------------------------- 1.1 Sale and Issuance of Series A Preferred Stock. Subject to the --------------------------------------------- terms and conditions of this Agreement, the Purchaser agrees to purchase, and the Company agrees to sell and issue to the Purchaser, 80,000 shares of the Company's Convertible Series A Preferred Stock, $.001 par value (the "Series A Preferred Stock") at a purchase price of $6.25 per share, or an aggregate purchase price of $500,000 (the "Purchase Price"). The shares of Series A Preferred Stock purchased hereunder are hereafter referred to as the "Shares." 1.2 Closing. The purchase and sale of the Shares shall take place at ------- the offices of Stradling, Yocca, Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, at 10:00 A.M., on November __, 1997, or at such other time and place as the Company and Purchaser mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to the Purchaser a certificate representing the Shares against delivery to the Company by the Purchaser of (i) a wire transfer or a check in the amount of the $300,000 payable to the Company's order and (ii) that certain Demand Promissory Note dated October 31, 1997 in the principal amount of $200,000 payable by the Company to the Purchaser (the "Note"), which shall be cancelled and the principal amount of which shall be applied towards the Purchase Price. 1.3 Reservation of Common Stock. Shares of the Company's Common --------------------------- Stock issuable upon conversion of the Series A Preferred Stock and the Warrant (as defined below) when issued are herein referred to as the "Underlying Common Stock." The Shares, the Warrant (as defined below) and the Underlying Common Stock are sometimes herein referred to collectively as the "Securities." The Company will, prior to the Closing, authorize and reserve, and covenants to continue to reserve, free of preemptive rights and other preferential rights, a sufficient number of its previously authorized but unissued shares of Common Stock to satisfy the rights of conversion of all Shares and the exercise of the Warrant (as defined below). 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. --------------------------------------------- The Company hereby represents and warrants to the Purchaser as follows: 2.1 Organization and Standing. The Company is a corporation duly ------------------------- organized, validly existing, and in good standing under the laws of the State of Delaware, and has full power and authority to own and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified and authorized to do business, and is in good standing as a foreign corporation, in each jurisdiction where the nature of its activities and of its properties (both 1 owned and leased) makes such qualification necessary, except where the failure to so qualify would not have a material adverse effect upon the business and operations of the Company. 2.2 Capitalization. The authorized capital stock of the Company, -------------- immediately after the Closing, will consist of 20,000,000 shares of Common Stock, $.001 par value per share, of which 4,025,251 shares are issued an outstanding and 1,000,000 shares of Preferred Stock, $.001 par value per share, 320,000 shares of which are designated Series A Preferred Stock, of which 80,000 shares are or will be issued and outstanding. The rights, preferences and privileges associated with the Series A Preferred Stock are as set forth on Exhibit A attached hereto. All of the outstanding shares of Series A Preferred - --------- Stock and the Warrant (as defined below) have been, and upon conversion of the Series A Preferred Stock and upon exercise of the Warrant (as defined below), the Underlying Common Stock will be, duly and validly issued in compliance with federal and state securities laws. 2.3 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 other agreements and documents contemplated herein, the performance of all the Company's obligations hereunder and thereunder, and for the authorization, issuance, sale and delivery of the Securities has been taken or will be taken prior to the Closing. This Agreement and the other agreements and documents contemplated herein, when executed and delivered, shall constitute valid and legally binding obligations of the Company enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and subject to the availability of equitable remedies. 2.4 Validity of Securities. The sale of the Shares and the issuance ---------------------- of the Warrant (as defined below) and the Underlying Common Stock are not and will not be subject to any preemptive rights or rights of first refusal that have not been waived and, when issued, sold and delivered in compliance with the provisions of this Agreement and/or the Certificate of Incorporation, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares, the Warrant (as defined below) and the Underlying Common Stock may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 2.5 Compliance with Other Instruments. The Company is not in --------------------------------- violation of any term of its Certificate of Incorporation or Bylaws, any material mortgage, indenture, contract, agreement, instrument, judgment, decree, order or, to the best of its knowledge, any statute, rule or regulation applicable to the Company. The execution, delivery, and performance of and compliance with this Agreement, and the issuance and sale of the Securities pursuant hereto, will not result in any violation of any term of the Certificate of Incorporation or Bylaws of the Company, or any material mortgage, indenture, contract, agreement, instrument, judgment, decree or order, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the properties or assets of the Company. 2.6 Litigation, etc. There are no actions, proceedings, or --------------- investigations before any court, or administrative agency pending or, to the best of the Company's knowledge, currently threatened against or with respect to the Company (or any basis therefor known to the Company), which question the validity of this Agreement or any action taken or to be taken in connection herewith, or which, either individually or in the aggregate, might result in a material adverse change in the 2 business, prospects, conditions, affairs, or operations of the Company or in any of its properties or assets, or in any material impairment of the right or ability of the Company to carry on its business as now conducted or as proposed to be conducted, or in any material liability on the part of the Company. The Company is not a party or subject to, and none of its assets are bound by, the provisions of any order, writ, injunction, judgment, or decree of any court or governmental agency or instrumentality. 2.7 Governmental Consents. All consents, approvals, orders, or --------------------- authorizations of, or registrations, qualifications, designations, declarations, or filings with, any governmental authority, required on the part of the Company in connection with the valid execution and delivery of this Agreement and the other agreements and documents contemplated herein, the offer, sale or issuance of the Securities, or the consummation of any other transaction contemplated hereby have been obtained, or will be effective at the Closing, except for notices required or permitted to be filed with certain state and federal securities commissions after the Closing, which notices will be filed on a timely basis. 2.8 Offering. Assuming the accuracy of the representations and -------- warranties of the Purchaser contained in Section 3.3 hereof, the offer, issue, and sale of the Securities are and will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "1933 Act"), and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws. 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. ----------------------------------------------- The Purchaser hereby represents and warrants to the Company as follows: 3.1 Legal Power. It has the requisite legal power to enter into this ----------- Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement. 3.2 Due Execution. This Agreement, and the other documents and ------------- agreements contemplated herein, have been duly authorized, executed and delivered by it, and, upon due execution and delivery by the Company, this Agreement and the other documents and agreements contemplated herein will each be a valid and binding agreements of it, enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and subject to the availability of equitable remedies. 3.3 Information. It, or its representatives, have received all ----------- information as the Purchaser considers necessary for evaluating the risks and merits of acquiring the Securities and has had the opportunity to make further inquiries of the Company and its representatives for additional information. 3.4 Investment Representations. -------------------------- (a) It is acquiring the Securities for its own account, not as nominee or agent, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the "1933 Act"). 3 (b) It understands that (i) Securities have not been registered under the 1933 Act by reason of a specific exemption therefrom, that they must be held by it indefinitely, and that it must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the 1933 Act or is exempt from such registration; (ii) each certificate representing the Securities will be endorsed with the following legend: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "1933 ACT") AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR IF THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT." and (iii) the Company will instruct any transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legend are satisfied; provided, however, that no such opinion of counsel shall be necessary if the sale, transfer or assignment is made pursuant to Rule 144 of the 1933 Act and the Purchaser provides the Company with evidence reasonably satisfactory to the Company and its counsel that the proposed transaction satisfies the requirements of Rule 144. The Company agrees to remove the foregoing legend from any securities if the requirements of Rule 144(k) of the 1933 Act (or any successor rule or regulation) apply with respect to such securities and the Company and its counsel are provided with reasonably satisfactory evidence that the requirements of Rule 144(k) apply. (c) It is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. (d) It is an "accredited investor" within the meaning of Rule 501 of Regulation D of the 1933 Act, as presently in effect. (e) It understands that the Securities are characterized as "restricted securities" under the federal 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 resold without registration under the 1933 Act, only in certain limited circumstances, and it represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act. (f) Its principal business address is as set forth on the signature page hereto, and it does not reside in any state of the United States other than the state specified in its address on the signature page hereto. 3.5 Subsequent Sales of Series A Preferred Stock. The Purchaser -------------------------------------------- acknowledges that the Company may sell additional shares of Preferred Stock, which may or may not have the same terms as that of the Series A Preferred Stock, to such persons as the Board of Directors of the Company may determine, and the Purchaser also acknowledges that it does not have any preemptive or similar rights to purchase any such additional shares of Preferred Stock. 4 4. CONDITIONS TO CLOSING. --------------------- 4.1 Conditions to Obligations of the Purchaser. The Purchaser's ------------------------------------------ obligation to purchase the Shares at the Closing is subject to the fulfillment, at or prior to the Closing of all of the following conditions, any of which may be waived by the Purchaser in writing: (a) Representations and Warranties True; Performance of --------------------------------------------------- Obligations. The representations and warranties made by the Company in Section 2 - ----------- hereof shall be true and correct on the date of the Closing, with the same force and effect as if they had been made on and as of said date; the business and assets of the Company shall not have been adversely affected in any material way prior to the Closing; and the Company shall have performed all obligations and conditions herein required to be performed by it on or prior to the Closing. (b) Loan Agreements. The Company and Comerica Bank-California --------------- shall have entered into the Modification to Revolving Credit Loan & Security Agreement in the form of Exhibit B-1 and the form of Master Revolving Note ----------- attached hereto as Exhibit B-2 (collectively, the "Loan Agreements"). ----------- (c) Indemnification, Pledge and Security Agreement. Michael ---------------------------------------------- Feygin, the President and Chief Executive Officer of the Company, and the Purchaser shall have entered into the Indemnification, Pledge and Security Agreement in the form of Exhibit C attached hereto. --------- (d) Issuance of Warrant; Payment of Funds. In consideration for ------------------------------------- the execution by the Purchaser of the Guaranty in the form of Exhibit D attached --------- hereto (the "Guaranty"), as provided in Section 5.1 below, the Company shall have issued a warrant to purchase 100,000 shares of the Company's Common Stock to the Purchaser, which warrant shall be in the form of Exhibit E attached --------- hereto (the "Warrant") and shall have paid the Purchaser the sum of $10,000, by delivery of a check or wire transfer to an account designated by the Purchaser. (e) Proceedings and Documents. All corporate and other ------------------------- proceedings in connection with the transactions contemplated at the Closing, and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchaser, and the Purchaser shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request. (f) Qualifications, Legal Investment. All authorizations, -------------------------------- approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful sale and issuance of the Shares and the Warrant pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the sale of the Shares or the Warrant or the proposed issuance of the Underlying Common Stock shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the Company, threatened by the Securities and Exchange Commission, the California Commissioner of Corporations, or similar officer of any other state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the Shares and the Warrant shall be legally permitted by all laws and regulations to which the Purchaser and the Company are subject. (g) Due Diligence. The results of Purchaser's business, legal ------------- and accounting due diligence with respect to the Company, including, without limitation, a review of the Company's cash flow projections for the twelve month period following the date of this Agreement (which shall have been delivered to the Purchaser within a reasonable time prior to the 5 Closing), shall have revealed, to the Purchaser's reasonable satisfaction, that the Company will be able to meet its capital needs for existing operations and future anticipated growth for the twelve month period following the date of this Agreement. 4.2 Conditions to Obligations of the Company. The Company's ---------------------------------------- obligation to issue and sell the Shares under this Agreement is subject to the fulfillment to the Company's satisfaction, on or prior to the Closing, of the following conditions, any of which may be waived by the Company in writing: (a) Representations and Warranties True, Performance of --------------------------------------------------- Obligations. The representations and warranties made by the Purchaser in - ----------- Section 3 hereof shall be true and correct at the date of the Closing, with the same force and effect as if they had been made on and as of said date. The Purchaser shall have performed and complied with all agreements and conditions herein required to be performed or complied with by it on or before the Closing. (b) Guaranty. The Purchaser shall have executed the Guaranty. -------- (c) Qualifications, Legal Investment. All authorizations, -------------------------------- approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful sale and issuance of the Shares and the Warrant pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the sale of the Shares or the Warrant or the proposed issuance of the Underlying Common Stock shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the Company, threatened by the Securities and Exchange Commission, the California Commissioner of Corporations, or any commissioner of corporations or similar officer of any other state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the Shares and the Warrant shall be legally permitted by all laws and regulations to which the Purchaser and the Company are subject. (d) Payment of Purchase Price; Delivery of the Note. The ----------------------------------------------- Purchaser shall have delivered, in payment of the Purchase Price for the Shares purchased by it at the Closing, (i) the cash portion of the Purchase Price (as contemplated in Section 1.2) and (ii) the Note for cancellation by the Company. 5. ADDITIONAL AGREEMENTS. --------------------- 5.1 Execution of Guaranty. At or prior to the Closing, and in --------------------- consideration for the payments made to Purchaser pursuant to Section 5.2 below, the Purchaser hereby agrees to execute the Guaranty for the benefit of the Company, pursuant to which the Purchaser shall guaranty the Company's obligation to pay Comerica Bank-California $500,000 as provided in the Loan Agreement. 5.2 Issuance of Warrants; Payment of Funds. The Company hereby -------------------------------------- agrees that, at the Closing, in consideration for the execution by the Purchaser of the Guaranty, the Company shall (i) issue the Warrant to the Purchaser and (ii) pay $10,000 to the Purchaser by delivery of a check or by wire transfer to an account designated by the Purchaser. In addition to the foregoing, the Company hereby covenants and agrees that it shall issue warrants to purchase 10,000 shares of the Company's Common Stock to the Purchaser for each $100,000 that the Company borrows under the terms of the Master Revolving Note dated October 30, 1997, in the form attached hereto as Exhibit B-2, provided that the ----------- Guaranty shall, at the time of such borrowing, still be in full force and effect. Such additional warrants shall be in the same form as the Warrant and shall be issued to the Purchaser within 6 five (5) business days after any such amounts are borrowed by the Company. For purposes of calculating the number of additional warrants to be issued to the Purchaser at such time that the Company borrows $100,000, each such $100,000 shall not include any amounts which have been borrowed, repaid and borrowed again (for example, if the Company borrows $100,000, repays the $100,000 and then borrows $200,000, the Company will only be obligated to issue an aggregate of 20,000 warrants to the Purchaser). 5.3 Payment of Commissions. The Company hereby agrees that it shall ---------------------- pay the Purchaser a commission on the purchase price paid for Series A Preferred Stock by investors who are introduced to the Company by the Purchaser, at rate of six Percent (6%) of the aggregate purchase price paid by such investors. Such commissions, if any, shall be paid at the closing of the sale by the Company of Series A Preferred Stock to such investors. 6. MISCELLANEOUS. ------------- 6.1 Governing Law. This Agreement shall be governed by and construed ------------- under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. 6.2 Survival. The respective representations, warranties, covenants, -------- and agreements made herein shall survive any investigation made by the Purchaser and the applicable closing of the transactions contemplated hereby. 6.3 Successors and Assigns. Except as otherwise expressly provided ---------------------- herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto. 6.4 Entire Agreement. This Agreement, the Exhibits hereto, and the ---------------- other documents delivered pursuant hereto constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants, or agreements except as specifically set forth herein or therein. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided herein. 6.5 Separability. In case any provision of this Agreement shall be ------------ invalid, illegal, or unenforceable, it shall, to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 6.6 Amendment and Waiver. Any term of this Agreement may be amended -------------------- and the observance of any term of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), with the written consent of the Company and the Purchaser. 6.7 Delays or Omissions. No delay or omission to exercise any right, ------------------- power, or remedy accruing to the Purchaser upon any breach, default or noncompliance of the Company under this Agreement or under any other document or agreement contemplated herein, shall impair any such 7 right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on the Purchaser's part of any breach, default or noncompliance under this Agreement or under any other document or agreement contemplated herein or any waiver on the Purchaser's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing, and that all remedies, either under this Agreement or under any other document or agreement contemplated herein, by law, or otherwise afforded to the Purchaser, shall be cumulative and not alternative. 6.8 Notices, etc. All notices and other communications required or ------------ permitted hereunder shall be in writing and shall be deemed effectively given upon personal delivery or on the third day following mailing by registered or certified mail, return receipt requested, postage prepaid, addressed: (a) if to the Purchaser, at such Purchaser's address as set forth on the signature page hereto, or at such other address as the Purchaser shall have furnished to the Company in writing, or (b) if to the Company, at 24015 Garnier Street, Torrance, California 90505, or at such other address as the Company shall have furnished to the Purchaser in writing, with a copy to Nick E. Yocca, Esq., Stradling, Yocca, Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. 6.9 Fees and Expenses. The Company shall pay all of the Purchaser's ----------------- reasonable legal fees incurred in connection with the negotiation and execution of this Agreement and the other documents and agreements contemplated herein. In addition, if legal action is brought by, or on behalf of, the Purchaser or by the Company to enforce or interpret this Agreement, the prevailing party shall be entitled to recover its attorneys' fees and legal costs in connection therewith. 6.10 Information Confidential. The Purchaser acknowledges that the ------------------------ information received by it pursuant hereto is confidential and for such Purchaser's use only, and it will refrain from using such information or reproducing, disclosing, or disseminating such information to any other person (other than its employees, affiliates, agents, or partners having a need to know the contents of such information and its attorneys), except in connection with the exercise of rights under this Agreement, unless the Company has made such information available to the public generally or it is required by a governmental body to disclose such information. 6.11 Titles and Subtitles. The titles of the paragraphs and -------------------- subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 6.12 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 8 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. HELISYS, INC. By: /s/ MICHAEL FEYGIN ----------------------------------- Michael Feygin, President and Chief Executive Officer PURCHASER /s/ WALTER W. CRUTTENDEN, III --------------------------------------- Walter W. Cruttenden, III Address: Cruttenden Roth Incorporated 18301 Von Karman Irvine, California 92612 9 EX-2 3 WARRANT TO PURCHASE 100,000 SHARES OF COMMON STOCK EXHIBIT 2 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. Warrant to Purchase 100,000 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF HELISYS, INC. This is to certify that, for value received, Walter W. Cruttenden, III, or registered assigns (in each case, the "Holder"), is entitled to purchase, subject to the provisions of this Warrant (the "Warrant"), from Helisys, Inc., a Delaware corporation (the "Company"), having its principal place of business at 24015 Garnier Street, Torrance, California 90505, at any time during the period from the date hereof (the "Commencement Date") to 5:00 p.m., California time, until November __, 2002 (the "Expiration Date"), at which time this Warrant shall expire and become void, One Hundred Thousand (100,000) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at $1.75 per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise Price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. Exercise of Warrant. This Warrant may be exercised in full at any time ------------------- from and after the date hereof and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day which shall not be such a day. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) a bank check for the Exercise Price for the number of Warrant Shares specified in the exercise form. If this Warrant is exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered by the Holder. 2. Reservation of Shares. The Company shall, at all times until the --------------------- expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. The Company covenants that the shares of Common Stock issuable on exercise of the Warrant shall be duly and validly issued and fully paid and non-assessable and free of liens, charges and all taxes with respect to the issue thereof, and that at such time as the Warrant Shares may be sold, without registration, pursuant to the provisions of Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), such shares shall be listed on each national securities exchange and/or NASDAQ, if any, on which the other shares of outstanding Common Stock of the Company are then listed. 3. Fractional Interests. The Company shall not issue any fractional shares -------------------- or scrip representing fractional shares upon the exercise or exchange of this Warrant. With respect to any fraction of a share resulting from the exercise or exchange hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current fair market value per share of Common Stock (herein, the "Market Price Per Share"), determined as follows: 3.1 If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or is listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the current fair market value shall be the last reported sale price of the Common Stock on such exchange or NASDAQ on the last business day prior to the date of exercise of this Warrant, or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or NASDAQ; 3.2 If the Common Stock is not so listed or admitted to unlisted trading privileges or quoted on NASDAQ, the current fair market value shall be the mean of the last bid and asked prices reported on the last business day prior to the date of the exercise of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under clause (i) above, by the National Quotation Bureau Incorporated; or 3.3 If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current fair market value shall be an amount, not less than book value, determined in such reasonable manner as may be prescribed by the Company's Board of Directors in good faith. 4. No Rights as Stockholders. This Warrant shall not entitle the Holder to ------------------------- any rights as a stockholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 5. Adjustments. ----------- 5.1 Subdivision or Combination of Shares. If the Company is recapitalized ------------------------------------ through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced, as of the record date for such recapitalization, in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. 5.2 Dividends in Common Stock or Securities Convertible into Common Stock. ---------------------------------------------------------------------- If the Company declares a dividend or distribution on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of shares of Common Stock for which this Warrant may be exercised shall be increased, as of the record date for determining which 2 holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares (and shares of Common Stock issuable upon conversion of all such securities convertible into Common Stock) of Common Stock as a result of such dividend or distribution, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all the Warrant Shares issuable hereunder immediately after the record date for such dividend or distribution shall equal the aggregate amount so payable immediately before such record date. 5.3 Distributions of Other Securities or Property. --------------------------------------------- (a) Other Securities. If the Company distributes to holders of its ---------------- Common Stock, other than as part of its dissolution or liquidation or the winding up of its affairs, any of its securities (other than Common Stock or securities convertible into Common Stock) or any evidence of indebtedness, then in each case, the number of Warrant Shares thereafter purchasable upon exercise of this Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable by a fraction, of which the numerator shall be the then Market Price Per Share of Common Stock (as determined pursuant to Section 3) on the record date mentioned below in this Section 5.3(a), and of which the denominator shall be the then Market Price Per Share of Common Stock on such record date, less the then fair value (as determined by the Board of Directors of the Company in good faith) of the portion of the shares of the Company's capital stock or evidences of indebtedness distributable with respect to each share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective retroactively as of the record date for the determination of stockholders entitled to receive such distribution. (b) Property. If the Company distributes to the holders of its Common -------- Stock, other than as a part of its dissolution or liquidation or the winding up of its affairs, any of its assets (including cash), the Exercise Price per Warrant Share shall be reduced, without any further action by the parties hereto, by the Per Share Value (as hereinafter defined) of the dividend or distribution. For the purposes of this Section 5.3(b), the "Per Share Value" of any dividend or distribution other than cash shall be equal to the fair market value of such non-cash distribution on each share of Common Stock as determined in good faith by the Board of Directors of the Company; for dividends or distributions of cash, the Per Share Value thereof shall be the cash distributed per share of Common Stock. 5.4 Rights Offering. If the Company offers rights or warrants to persons --------------- which entitle them to subscribe to or purchase Common Stock or securities convertible into Common Stock then: (a) If the price per share (together with the value of the consideration, if any, paid for such rights or warrants) is lower on the record date referred to below than the then Market Price Per Share of Common Stock, the number of Warrant Shares thereafter purchasable upon the exercise of the Warrant shall be determined by multiplying the number of Warrant Shares immediately theretofore purchasable upon exercise of the Warrant by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at the then Market Price Per Share of Common Stock. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective retroactively as of the record date for the determination of stockholders entitled to receive such rights or warrants. 3 (b) If, however, the price per share (together with the value of the consideration, if any, paid for such rights or warrants) is not lower on such record date than the then Market Price Per Share of Common Stock, the Company shall give written notice of any such proposed offering to the Holder at least fifteen days prior to the proposed record date in order to permit the Holder to exercise this Warrant on or before such record date. There shall be no adjustment in the number of shares of Common Stock for which this Warrant may be exercised, or in the Exercise Price, by virtue of any such distribution pursuant to this Section 5.4(b). 5.5 Merger, Sale of Assets. If at any time while this Warrant, or any ---------------------- portion thereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer (except in the event that the Holder has exercised the "Put" pursuant to the provisions of Section 7 below), lawful provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 5. The foregoing provisions of this Section 5.5 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. 5.6 Reclassification. If the Company, at any time while this Warrant, or ---------------- any portion thereof, remains outstanding and unexpired, shall change any of the securities as to which purchase rights under this Warrant exist, by reclassification of securities or otherwise, into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 5. 5.7 Liquidation, etc. If the Company shall, at any time before the ---------------- expiration of this Warrant, dissolve, liquidate or wind up its affairs, or otherwise declare a dividend, or make a distribution to the holders of its Common Stock generally, whether in cash, property or assets of any kind, including any dividend payable in stock or securities of any other issuer owned by the Company (excluding regularly payable cash dividends declared from time to time by the Company's Board of Directors or any dividend or distribution referred to in Section 5.2 or Section 5.3), the Exercise Price shall be reduced, without any further action by the parties hereto, by the 4 Per Share Value (as hereinafter defined) of the dividend. For purposes of this Section 5.7, the "Per Share Value" of a cash dividend or other distribution shall be the dollar amount of the distribution on each share of Common Stock and the "Per Share Value" of any dividend or distribution other than cash shall be equal to the fair market value of such non-cash distribution on each share of Common Stock as determined in good faith by the Board of Directors of the Company. 5.8 Adjustment for Change in Market Price per Share. The Exercise Price ----------------------------------------------- shall be adjusted in the event that, at any time during the period from the date of this Warrant until the Warrant is exercised or repurchased pursuant to the provisions of Section 6 below, the average of the mean of the closing bid and asked prices of the Company's Common Stock, over a consecutive seven (7) day period, falls below $1.75 per share, in which case the Exercise Price shall be reduced to equal the lowest average of the mean of the closing bid and asked prices of the Company's Common Stock, over a consecutive seven (7) day period, at any time during the period from the date of this Warrant until the Warrant is exercised or repurchased pursuant to the provisions of Section 6 below. 5.9 Adjustment of Exercise Price. Whenever the number of Warrant Shares ---------------------------- purchasable upon the exercise of the Warrant is adjusted, the Exercise Price with respect to the Warrant Shares shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares so purchasable immediately thereafter. 5.10 Notice of Adjustment. Whenever the number of Warrant Shares -------------------- purchasable upon the exercise of the Warrant or the Exercise Price of the Warrant Shares is adjusted as provided herein, the Company shall mail to the Holder a notice of such adjustment or adjustments, prepared and signed by the Chief Financial Officer or Secretary of the Company, which sets forth the number of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise Price of such Warrant Shares after such adjustment, a brief statement of the facts requiring such adjustment, and the computation by which such adjustment was made. 6. Put Agreement. ------------- 6.1 The Company hereby irrevocably grants and issues to Holder the right and option to sell to the Company (the "Put") this Warrant during the Put Exercise Period (as defined below), at a purchase price equal to $1.50 per each unissued Warrant Share hereunder (the "Purchase Price"). 6.2 The "Put Exercise Period" shall mean the five (5) day period immediately following the earlier of (i) such time as the Company no longer has a class of securities registered pursuant to either Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934 and (ii) consummation of (A) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (B) a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person. 6.3 The Company shall pay to the Holder, in cash or cashier's check, the Purchase Price in exchange for the delivery to the Company of this Warrant by the Holder within thirty (30) days of the receipt of written notice, addressed as set forth in Section 10 hereto, from 5 the Holder of its intention to exercise the Put, provided that such notice is delivered to the Company within the Put Exercise Period. Notwithstanding the foregoing, in the event that the Company is prohibited from paying the Purchase Price as provided above, by virtue of the provisions of Chapter 5 of the California Corporations Code or otherwise, the Company shall be entitled to pay the Purchase Price by delivery of a promissory note to the Holder, which promissory note shall state that the Company shall only be obligated to make payments thereunder at such time and to the extent that it is able to do so under applicable law. 7. Notices to Holder. So long as this Warrant shall be outstanding (a) if ----------------- the Company shall pay any dividends or make any distribution upon the Common Stock otherwise than in cash or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least twenty days prior to the relevant date described below (or such shorter period as is reasonably possible if twenty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's stockholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place, the effect of the action, to the extent such effect may be known on the date of such notice, on the Exercise Price and the kind and amount of shares of stock or other securities or property deliverable on the exercise of the Warrant, and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. All such notices shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, and (ii) in the case of mailing, on the third business day following the date of such mailing. 8. Transfer or Loss of Warrant. --------------------------- 8.1 Transfer. This Warrant may be transferred, exercised, exchanged or -------- assigned ("transferred"), in whole or in part, subject to the provisions of this Section 8.1. The Holder shall have the right to transfer all or a part of this Warrant and all or part of the Warrant Shares. The Company shall register on its books any transfer of the Warrant, upon surrender of same to the Company with a written instrument of transfer duly executed by the registered Holder or by a duly authorized attorney. Upon any such registration of a transfer, new Warrant(s) shall be issued to the transferee(s) and the surrendered Warrant shall be cancelled by the Company. A Warrant may also be exchanged, at the option of the Holder, for one or more new Warrants representing the aggregate number of Warrant Shares evidenced by the Warrant surrendered. This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant or the conversion of the Warrant Shares shall be subject to restrictions on transferability unless registered under the Securities Act, or unless an exemption from registration is available. Until this Warrant and the Warrant Shares are so registered, this Warrant and any certificate for Warrant Shares issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant or the Warrant Shares may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant or the Warrant Shares may be transferred without such registration. This Warrant and the Warrant Shares may also be subject to restrictions on transferability under 6 applicable state securities or blue sky laws. Until the Warrant and the Warrant Shares are registered under the Securities Act, the Holder shall reimburse the Company for its expenses, including attorneys' fees, incurred in connection with any transfer or assignment, in whole or in part, of this Warrant or any Warrant Shares. 8.2 Compliance with Laws. Until this Warrant or the Warrant Shares are -------------------- registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant or the Warrant Shares that the transferee (who may be the Holder in the case of an exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that the transferee provide written information adequate to establish that the transferee is an "accredited investor" within the meaning of Regulation D issued under the Securities Act, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act, all as determined by counsel to the Company. 8.3 Loss of Warrant. Upon receipt by the Company of evidence reasonably --------------- satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct its transfer agent to execute and deliver, a new Warrant of like tenor and date, any such lost, stolen or destroyed Warrant thereupon shall become void. 9. No Impairment. The Company will not, by amendment of its Certificate of ------------- Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times, in good faith, take all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 10. Notices. Notices and other communications to be given to the Holder ------- shall be deemed sufficiently given if delivered by hand, or three (3) business days after mailing if mailed by registered or certified mail, postage prepaid, addressed in the name and at the address of such Holder appearing on the records of the Company. Notices or other communications to the Company shall be deemed to have been sufficiently given if delivered by hand or three (3) business days after mailing if mailed by registered or certified mail, postage prepaid, to the Company at: Helisys, Inc. 24015 Garnier Street Torrance, California 90505 Either party may change the address to which notices shall be given by notice pursuant to this Section 10. 11. Governing Law. This Warrant shall be governed by and construed in ------------- accordance with the laws of the State of Delaware. 7 IN WITNESS WHEREOF, the Company has executed this Warrant as of November 18, 1997. HELISYS, INC., a Delaware corporation By: /s/ MICHAEL FEYGIN ------------------------------------- Michael Feygin Its: President and Chief Executive Officer 8 Annex A ------- [FORM OF EXERCISE] (To be executed upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase __________ shares of Common Stock and herewith tenders payment for such shares of Common Stock in the amount of $ ____________ by bank check made payable to "Helisys, Inc." The undersigned requests that a certificate for such shares of Common Stock be registered in the name of _________________________, whose address is ___________________________. If such number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of the shares of Common Stock be registered in the name of __________________________, whose address is _________ ________________________________, and that such Warrant Certificate be delivered to _____________________, whose address is ____________________________________. Dated: Signature:________________________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant Certificate.) __________________________ (Insert Social Security or Taxpayer Identification Number of Holder.) EX-3 4 CERTIFICATE OF DETERMINATION EXHIBIT 3 CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK OF HELISYS, INC., a Delaware corporation Pursuant to Section 151 of the General Corporation Law of the State of Delaware _________________ HELISYS, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies, pursuant to the authority contained in the Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware that the following resolution has been duly adopted by the Board of Directors of the Corporation creating a series of its Preferred Stock designated as Series A Preferred Stock: RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the "Board") by the provisions of the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), there hereby is created, out of the 1,000,000 shares of Preferred Stock, par value $0.001 per share, of the Corporation authorized in Article 4 of the Certificate of Incorporation (the "Preferred Stock"), a series of the Preferred Stock of the Corporation consisting of 320,000 shares, which shall be designated Series A Convertible Preferred Stock, which series shall have the following powers, designations, preferences and relative, participating, optional and other rights, and the following qualifications, limitations and restrictions: A. RIGHTS, PREFERENCES AND RESTRICTIONS OF SERIES A PREFERRED STOCK. ---------------------------------------------------------------- The following is a statement of the designations, powers, privileges, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions relating to the Series A Preferred Stock ("Preferred Stock"): 1. Dividends. When, as and if declared by the Board of --------- Directors, the holders of the outstanding shares of the Preferred Stock shall be entitled to receive, out of funds legally available therefor, cumulative dividends, commencing on November 18, 1997, at the rate of ten percent (10%) per annum, and payable upon (i) conversion of the Preferred Stock, as expressly provided in Section 4 below, or (ii) liquidation, dissolution or winding up pursuant to Section 2 hereof. Such dividends shall accrue, whether or not earned or declared; provided, however, that -------- ------- such dividends shall cease accruing on November 18, 1999, or at any time thereafter, in the event that the fair market value of the Common Stock (as determined pursuant to Section 4(a)(i) below) on November 18, 1999, or on such later date, equals or exceeds $3.00 per share. Any accumulation of dividends on the Preferred Stock shall not bear interest. 2. Liquidation, Dissolution or Winding Up. -------------------------------------- (a) Preference - Preferred Stock. In the event of any ---------------------------- liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of each share of Preferred Stock shall be entitled to be paid out of the assets of the Corporation, whether such assets are capital, surplus, or earnings, before any sums shall be paid or any assets distributed among the holders of shares of Common Stock, an amount equal to $6.25 per share of Preferred Stock, plus any accrued but unpaid dividends. If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Preferred Stock of the amount thus distributable, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Preferred Stock. After such payment shall have been made in full to the holders of the Preferred Stock or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of holders of the Preferred Stock so as to be available for such payment, holders of the Preferred Stock shall be entitled to no further participation in the distribution of the assets of the Corporation and shall have no further rights of conversion, and the remaining assets available for distribution shall be distributed ratably among the holders of the Common Stock. (b) A consolidation or merger (other than a consolidation or merger in which the holders of voting securities of the Corporation immediately before the consolidation or merger own (immediately after the consolidation or merger) voting securities of the surviving or acquiring corporation, or of a parent party of such surviving or acquiring corporation, possessing more than 50% of the voting power of such surviving or acquiring corporation or parent party) of the Corporation or a sale of all or substantially all of the assets of the Corporation shall be regarded as a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this Section 2. (c) Each holder of Preferred Stock shall have the right to elect the benefits of the provisions of Section 4(g) hereof in lieu of receiving payment in liquidation, dissolution or winding up of the Corporation pursuant to this Section 2. The election procedures shall be as provided in Section 4(g) hereof. (d) Whenever the distribution provided for herein shall be paid 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 Board of Directors of the Corporation. 3. Voting Power. Each holder of Preferred Stock shall be ------------ entitled to vote on all matters and shall be entitled to that number of votes equal to the largest number of whole shares of Common Stock into which such holder's shares of Preferred Stock could be converted, pursuant to the provisions of Section 4 hereof, at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. Except as otherwise expressly provided herein or as required by law, the holders of shares of Preferred Stock and Common Stock shall vote together as a class on all matters. 2 4. Conversion Rights. The holders of the Preferred Stock shall ----------------- have the following conversion rights: (a) General. ------- (i) Subject to and in compliance with the provisions of this Section 4, any shares of the Preferred Stock may, at the option of the holder, be converted at any time or from time to time into fully-paid and nonassessable shares (calculated as to each conversion to the largest whole share) of Common Stock. The number of shares of Common Stock to which a holder of Preferred Stock shall be entitled upon conversion shall be the product obtained by multiplying the Applicable Conversion Rate (determined as provided in Section 4(b)) by the number of shares of Preferred Stock being converted together with payment of accrued but unpaid dividends either (i) in cash or (ii) in shares of Common Stock by converting the accrued and unpaid dividends at the then fair market value of such Common Stock. The method of payment of the dividends as provided in (i) and (ii) above shall be at the election of the holder of the Preferred Stock, with the fair market value determined as follows: (i) if the Common Stock is publicly traded, the average over the preceding twenty (20) trading days of the mean of the closing bid and asked prices on the over-the-counter market as reported by NASDAQ, or, if then traded on a national securities exchange or the NASDAQ National Market, the average over the preceding twenty (20) trading days of the mean of the high and low prices on the principal national securities exchange or the NASDAQ National Market on which it is so traded over the preceding twenty (20) trading days, and (ii) if the Common Stock is not publicly traded, then as agreed upon by the Corporation and a majority in interest of the holders of the Preferred Stock. If no such agreement is reached within thirty (30) days, the fair market value shall be determined by appraisal; and (ii) each share of Preferred Stock shall automatically be converted into a number of shares of Common Stock equal to the product obtained by multiplying the Applicable Conversion Rate determined as provided in Section 4(b) by the number of shares of Preferred Stock being converted on November __, 2002, if such Preferred Stock remains outstanding on November __, 2002. (b) Applicable Conversion Rate. The conversion rate in -------------------------- effect at any time (the "Applicable Conversion Rate") shall be the quotient obtained by dividing $6.25, by the Applicable Conversion Value, calculated as provided in Section 4(c). (c) Applicable Conversion Value. The Applicable Conversion --------------------------- Value in effect from time to time, except as adjusted in accordance with Section 4(d) hereof, shall be $1.25. (d) Adjustments to Applicable Conversion Value. ------------------------------------------ (i) Upon Sale of Common Stock. If the Corporation ------------------------- shall, while there are any shares of Preferred Stock outstanding, issue or sell shares of its Common Stock without consideration or at a price per share less than the Applicable Conversion Value in effect immediately prior to such issuance or sale, then in each such case such Applicable Conversion Value upon each such issuance or sale, except as hereinafter provided, shall be 3 adjusted to an amount determined by multiplying the Applicable Conversion Value by a fraction: (A) the numerator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of shares of Common Stock which the net aggregate consideration received by the Corporation for the total number of such additional shares of Common Stock so issued would purchase at the Applicable Conversion Value, and (B) the denominator of which shall be (a) the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock, plus (b) the number of such additional shares of Common Stock so issued. The numerator and the denominator in Sections 4(d)(i)(A) and (B) above, shall include the number of shares subject to issuance pursuant to any convertible securities, including the Preferred Stock, as well as any warrants, options, subscription rights or purchase rights then outstanding. No adjustment shall be made under this subsection (d) until such adjustment would cause the Applicable Conversion Value to be decreased (or increased pursuant to the foregoing paragraph) by more than two percent (2%), provided that any such adjustments shall be added to subsequent adjustments. The Corporation's issuance of up to an aggregate of (i) 150,000 shares under the Employee Stock Purchase Plan, and (ii) 200,950 shares of Common Stock, or options exercisable therefor, net of repurchase or expiration of such options, pursuant to any stock purchase or stock option plan or other employee incentive program approved by the Board of Directors to the Corporation's employees, directors, officers or consultants shall not be deemed an issuance of additional shares of Common Stock and shall have no effect on the calculations contemplated by this Section 4(d) except as specifically otherwise set forth herein. The completion of a consolidation or merger in which the holders of voting securities of the Corporation immediately before the consolidation or merger own (immediately after the consolidation or merger) voting securities of the surviving or acquiring corporation, or of a parent party of such surviving or acquiring corporation, possessing more than 50% of the voting power of such surviving or acquiring corporation or parent party of the Corporation shall not be deemed an issuance of additional shares of Common Stock and shall have no effect on the calculations contemplated by this Section 4(d), except as specifically otherwise set forth herein. Except as discussed in the preceding paragraph, for the purposes of this Section 4(d), the issuance of any warrants, options, subscriptions or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for shares of Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share (as hereinafter 4 determined) which may be received by the Corporation for such Common Stock shall be less than the Applicable Conversion Value at the time of such issuance. Any obligation, agreement or undertaking to issue warrants, options, subscriptions or purchase rights at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or arises. No adjustment of the Applicable Conversion Value shall be made under this Section 4(d) upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options, subscriptions or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or subscriptions or purchase rights or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as above provided. Any adjustment of the Applicable Conversion Value with respect to this paragraph which relates to warrants, options, subscriptions or purchase rights with respect to shares of Common Stock shall be disregarded if and when any of such warrants, options, subscriptions or purchase rights expire or are cancelled without being exercised, so that the Applicable Conversion Value effective immediately upon such cancellation or expiration shall be equal to the Applicable Conversion Value in effect immediately prior to the time of the issuance of the expired or cancelled warrants, options, subscriptions or purchase rights, with such additional adjustments as would have been made to that Applicable Conversion Value had the expired or cancelled warrants, options, subscriptions or purchase rights not been issued. For purposes of this paragraph, the "Net Consideration Per Share" which may be received by the Corporation shall be determined as follows: (A) The "Net Consideration Per Share" shall mean the amount equal to the total amount of consideration, if any, received by the Corporation for the issuance of such warrants, options, subscriptions or other purchase rights or convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Corporation upon exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such warrants, options, subscriptions or other purchase rights or convertible or exchangeable securities were exercised, exchanged or converted. (B) The "Net Consideration Per Share" which may be received by the Corporation shall be determined in each instance as of the date of issuance of warrants, options, subscriptions or other purchase rights or convertible or exchangeable securities without giving effect to any possible future price adjustments or rate adjustments which may be applicable with respect to such warrants, options, subscriptions or other purchase rights or convertible or exchangeable securities. For purposes of this Section 4(d), if a part or all of the consideration received by the Corporation in connection with the issuance of shares of Common Stock or the issuance of any of the securities described in this Section 4(d) consists of property other than cash, the value of such contribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the Corporation, whereupon such value shall be given to such consideration and shall be recorded on the books of the Corporation with respect to receipt of such property. 5 This Section 4(d) shall not apply under any of the circumstances which would constitute an Extraordinary Common Stock Event (as hereinafter defined in Section 4(d)(ii)). (ii) Upon the happening of an Extraordinary Common Stock Event (as hereinafter defined), the Applicable Conversion Value (and all other conversion values set forth in Section (d)(i) above) shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the then effective Applicable Conversion Value by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Applicable Conversion Value. The Applicable Conversion Value, as so adjusted, shall be readjusted in the same manner upon the happening of any successive Extraordinary Common Stock Event or Events. "Extraordinary Common Stock Event" shall mean (i) the issue of additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) subdivision of outstanding shares of Common Stock into a greater number of shares of the Common Stock, or (iii) combination of outstanding shares of the Common Stock into a smaller number of shares of the Common Stock. (e) Dividends. In the event the Corporation shall make or issue, or --------- fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock or in assets (excluding cash dividends or distributions), then and in each such event provision shall be made so that the holders of the Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Corporation which they would have received had their Preferred Stock been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the Conversion Date (as that term is hereafter defined in Section 4(i)), retained such securities or such other assets receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4 with respect to the rights of the holders of the Preferred Stock. (f) Recapitalization or Reclassification. If the Common Stock ------------------------------------ issuable upon the conversion of the Preferred Stock shall be changed into the same or different number of shares of any class or classes of stock of the Corporation, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for elsewhere in this Section 4, or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 4), then and in each such event the holder of each share of Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change by holders of the number of shares of Common Stock into which such share of Preferred Stock might have been converted (taking into account all accrued and unpaid dividends and interest with respect to such Preferred 6 Stock) immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein. (g) Capital Reorganization, Merger or Sale of Assets. If at any ------------------------------------------------ time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 4) or a merger or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all of the Corporation's properties and assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger, consolidation or sale, to which a holder of Common Stock issuable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale or an amount of cash receivable as if the Preferred Stock had converted into shares of Common Stock. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of the Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 4 (including adjustment of the Applicable Conversion Value then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event in as nearly equivalent a manner as may be practicable. Each holder of Preferred Stock upon the occurrence of a capital reorganization, merger or consolidation of the Corporation, or the sale of all or substantially all its assets and properties as such events are more fully set forth in the first paragraph of this Section 4(g), shall have the option of electing treatment of his shares of Preferred Stock under either this Section 4(g) or Section 2 hereof by giving the Corporation written notice of such election at least ten days prior to the close of such transaction unless such holders received notice of transaction less than 20 days prior to the close of such transaction, then the notice of election shall be 10 days after such notice. (h) Accountant's Certificate as to Adjustments. In each case of an ------------------------------------------ adjustment or readjustment of the Applicable Conversion Rate, the Corporation will furnish each holder of Preferred Stock with a certificate, prepared by its chief financial officer showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. Upon the request of the holders of a majority of either series of the Preferred Stock, the Corporation will cause its independent public accountants to confirm the accuracy of such adjustment or readjustment. (i) Exercise of Conversion Privilege. To exercise its conversion -------------------------------- privilege, a holder of Preferred Stock shall surrender the certificate or certificates representing the shares being converted to the Corporation at its principal office, and shall give written notice to the Corporation at that office that such holder elects to convert such shares. Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock issuable upon such conversion shall be issued. The certificate or certificates for shares of Preferred Stock surrendered for conversion shall be accompanied by proper assignment thereof to the Corporation or in blank if the conversion 7 occurs automatically on November 18, 2002, the Corporation shall give holders of Preferred Stock 15 days written notice of such conversion. Except for the automatic conversions when the Conversion Date shall be November 18, 2002, the date when such written notice is received by the Corporation, together with the certificate or certificates representing the shares of Preferred Stock being converted, shall be the "Conversion Date." As promptly as practicable, but in any event within 15 days after the Conversion Date, the Corporation shall issue and shall deliver to the holder of the shares of Preferred Stock being converted such certificate or certificates as it may request for the number of whole shares of Common Stock issuable upon the conversion of such shares of Preferred Stock in accordance with the provisions of this Section 4, and cash in the amount of all accrued and unpaid dividends on such shares of Preferred Stock up to and including the Conversion Date. (j) Cash in Lieu of Fractional Shares. No fractional shares of --------------------------------- Common Stock or scrip representing fractional shares shall be issued upon the conversion of shares of Preferred Stock. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of Preferred Stock, the Corporation shall pay to the holder of the shares of Preferred Stock which were converted a cash adjustment in respect of such fractional shares in an amount equal to the same fraction of the market price per share of the Common Stock (as determined in a reasonable manner prescribed by the Board of Directors) at the close of business on the Conversion Date. The determination as to whether or not any fractional shares are issuable shall be based upon the total number of shares of Preferred Stock being converted at any one time by any holder thereof, not upon each share of Preferred Stock being converted. (k) Partial Conversion. In the event some but not all of the ------------------ shares of Preferred Stock represented by a certificate or certificates surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Preferred Stock which were not converted. (l) Reservation of Common Stock. The Corporation shall at all --------------------------- times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 5. No Redemption. The Preferred Stock shall not be redeemable by the ------------- Corporation. 6. No Reissuance of the Preferred Stock. No share or shares of the ------------------------------------ Preferred Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be reissued. The Corporation may from time to time take such appropriate corporate 8 action as may be necessary to reduce the authorized number of shares of the Preferred Stock accordingly. 7. No Dilution or Impairment. Except as expressly provided herein, ------------------------- the Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Preferred Stock set forth herein, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Preferred Stock against dilution or other impairment. Without limiting the generality of the foregoing, the Corporation (a) will not increase the par value of any shares of stock receivable on the conversion of the Preferred Stock above the amount payable therefor on such conversion, (b) will take all such action as may be necessary or appropriate in order that the Corporation may validly and legally issue fully paid and non-assessable shares of stock on the conversion of all Preferred Stock from time to time outstanding, (c) will not issue any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon voluntary or involuntary dissolution, liquidation or winding up of the Corporation, unless the rights of the holders thereof shall be limited to a fixed sum or percentage of par value in respect of participation in dividends and in any such distribution of assets, and (d) will not transfer all or substantially all of its properties and assets to any other person (corporate or otherwise), or consolidate with or merge into any other person or permit any such person to consolidate with or merge into the Corporation (if the Corporation is not the surviving person), unless such other person shall expressly assume in writing and will be bound by all the terms of the Preferred Stock set forth herein. 8. Notices of Record Date. In the event of (a) any taking by the ---------------------- Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or (a) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other corporation, or any other entity or person, or (b) any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then and in each such event the Corporation shall mail or cause to be mailed to each holder of Preferred Stock a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, (iii) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, 9 dissolution, liquidation or winding up. Such notice shall be mailed at least 30 days prior to the date specified in such notice on which such action is to be taken. 10 IN WITNESS WHEREOF, Helisys, Inc. has caused this Certificate of Designation, Preferences and Rights of Series A Preferred Stock to be duly executed by Michael Feygin, its President and Chief Executive Officer, and attested to by Dave T. Okazaki, its Chief Financial Officer, this 18 day of -- November, 1997. HELISYS, INC. By: /s/ MICHAEL FEYGIN ------------------------------------- Michael Feygin, President and Chief Executive Officer ATTEST: By: /s/ DAVE T. OKAZAKI ---------------------------------------- Dave T. Okazaki, Chief Financial Officer 11 -----END PRIVACY-ENHANCED MESSAGE-----