To All, I have found some interesting material and updates in the S3/A registration statement filed on September 9th , and have clipped them below. I have found little to note in the 10-K/A except inclusion of the lawsuits. I could find no change in the Catalina 8-K/a filed on the same date. It is also interesting to note that the company has corrected the spelling on the names of two of its competitors.
Point No. 2 in the risk factors section throws in new language about Heidelberg only having an exclusive on the Quickmaster DI until January 31, 1997. As you can see this is totally new language from that contained in the S3/A filed May 26th.
In point 7, the company for the first time admits that its patents are being challenged when it states . "as well as joint ownership of several patents relating to the Company's printing plate technology." Hmm!
We are also updated about the anonymous challenge to the patent. "The Patent Office has recently decided to grant the third party's request."
FROM S3/A OF 9/9/96
2. Dependence on Strategic Alliances and Relationships. The Company's strategy to date has been to enter into strategic alliances with major corporations in the graphic arts industry encompassing licensing, research, product development and commercialization, manufacturing, marketing, sales and service. In January 1991, the Company entered into a master agreement (the "Master Agreement"), a technology license agreement (the "Technology License") and a supply agreement (the "Supply Agreement") (the foregoing agreements being
sometimes collectively referred to herein as the "Heidelberg agreements") with Heidelberg. Pursuant to the Heidelberg Agreements, the Company has granted Heidelberg, through January 1997, the exclusive right, for use of the Direct Imaging technology in the Quickmaster DI. In consideration of such rights, Heidelberg agreed to pay to the Company royalties on the net sales prices of various specified types of Heidelberg presses. The Company has also granted
Heidelberg a non-exclusive license to use the PEARL technology in specified categories of presses other than the Quickmaster-DI and a sixty day right of first refusal to obtain the exclusive licenses, on the sames terms as being offered to a third party, before the Company can grant such exclusive license to such other party. Revenues from Heidelberg have accounted for substantially all of the Company's revenues to date. The terms of the Heidelberg Agreements are for periods ending in December 2011 in the case of the Master Agreement and Technology License. The term of the Supply Agreement, which primarily related to the GTO-DI which is no longer produced, expired in December 1995. The Master Agreement and Technology License Agreement contain, among other things, early termination provisions in the event of breaches and provide Heidelberg the right to extend the agreements for an additional five year period. The termination of the Master Agreement or Technology License Agreement would have a material
adverse effect on the Company.
FROM S3/A 0F MAY 28, 1996
1. Dependence on Strategic Alliances and Relationships. The Company's strategy to date has been to enter into strategic alliances with major corporations in the graphic arts industry encompassing licensing, research, product development and commercialization, manufacturing, marketing, sales and service. In January 1991, the Company entered into a master agreement (the "Master Agreement"), a technology license agreement (the "Technology License") and a supply agreement (the "Supply Agreement") (the foregoing agreements being
sometimes collectively referred to herein as the "Heidelberg Agreements") with Heidelberg. Pursuant to the Heidelberg Agreements, as amended, the Company and Heidelberg agreed to certain terms relating to the integration of the Direct Imaging technology into various presses manufactured by Heidelberg and certain of its related parties and the manufacture of components for and the
commercialization of such presses. Pursuant to the Heidelberg agreements, the Company has granted Heidelberg certain exclusive rights, subject to the satisfaction of certain conditions, for use of the Direct Imaging technology in the Quickmaster DI. In consideration of such rights, Heidelberg agreed to pay to the Company royalties on the net sales prices of various specified types of Heidelberg presses. Revenues from Heidelberg have accounted for substantially all of the Company's revenues to date. The terms of the Heidelberg Agreements are for periods ending in December 2011 in the case of the Master agreement and Technology License. The term of the Supply Agreement, which primarily related to the GTO-DI which is no longer produced, expired in December 1995. The Heidelberg Agreements contain, among other things, certain early termination provisions and extension provisions. The termination of the Master Agreement or Technology
License would have a material adverse effect on the Company.
THIS IS COMPLETELY NEW
7. Litigation. Between June 28, 1996 and July 31, 1996 seven lawsuits were filed against the Company and certain other defendants, including, but not limited to the Company's officers and directors. Six of such actions , were purportedly brought on behalf of similarly situated classes of defendants and were commenced in a United States District Court in either the State of New Hampshire or the Southern District of New York. The reamining action was filed derivately, on behalf of the Company in the Chancery Court of the State of Delaware.
The lawsuits each contain a variety of allegations (some of them
overlapping) including, among other things, that the defendants engaged in a plan and scheme and unlawful courses of conduct to artificially inflate, maintain and otherwise manipulate the value of the Company's common stock in order to cause certain of the individual defendants to profit from their sales of the Company's common stock and to induce plaintiffs' and other members of the purported class to purchase securities of the Company at artificially inflated prices by, among other things, making misleading statements of material facts or
omitting to state material facts in certain press releases and certain periodic reports. The plainfiffs allegations include violations of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, violations of Section 20(a) of the Exchange Act, common law fraud and deceit, negligent misrepresentation and waste of corporate assets. The plaintiffs generally are seeking to recover unspecified damages and reimbursement of their costs and expenses incurred in connection with the action. Moreover the plaintiff in the derivative action is also seeking a return to the Company of all salaries and the value of other remuneration paid to the defendants by the Company during the time they were in breach of their fiduciary duties and an accounting of and/or contstructive trust on the proceeds of defendants' trading activities in the Common Stock.
The Company believes that the allegations against it and its officers and directors alleged in the foregoing class actions and derivative action are without merit and the Company intends to vigourously defend all actions. However, the outcome of any litigation is subject to uncertainty and a successful claim against the Company in any of the foregoing class actions or the derivative action could have a material adverse effect on the Company.
The Company is also involved in an arbitration proceeding with Agfa in which the company claims that Agfa violated provisions of a confidentiality agreement and a manufacturing agreement (the "Manufacturing Agreement") between the parties and misappropriated certain trade secrets of the Company. The Company alleged that Agfa improperly obtained confidential information with regard to the Company's direct imaging plate technology and tha Agfa used the
confidential information in its own development efforts and to file several patent applications in its own name. In the proceeding Agfa has charged the Company with breaches of the Manufacturing Agreement, good faith and fair dealing and is seeking damages in an amount alleged to be $2,000,000 as well as joint ownership of several patents relating to the Company's printing plate technology. Although the Company believes that an unfavorable outcome of the arbitration is unlikely, there can be no assurance of the outcome of the proceeding.
THIS IS COMPLETELY NEW
9. Re-examination and Reissue of Patents. The Comapny has previously requested that the U.S. Patent Office re-examine one of its patents and reissue another of its patents relating to its PEARL technology as a result of information developed after those patents had issued. The Company has also been advised that an anonymous party has requested review by the U.S. Patent Office of an additional patent relating to the Company's PEARL technology. The Patent Office has recently decided to grant the third party's request. Although none of
the Compnay's products currently being produced rely solely on any of the foregoing patents, the scope and breadth of the patents being re-examined or reissued will be narrowed from those originally issued to the Company. Furthermore, although the Company believes that the patent subject to the third party's request for review is no longer fundamental to its business, the scope of the patent could be narrowed as a result of the reexamination which would reduce the breadth and degree of the patent coverage currently afforded the Company. |
