EXHIBIT 99.3
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EXECUTION COPY
EARTHSHELL CORPORATION
Common Stock
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REGISTRATION AND INVESTOR RIGHTS AGREEMENT
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Dated as of June 17, 2005
TABLE OF CONTENTS
Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 4
2. DEMAND REGISTRATIONS . . . . . . . . . . . . . . . . . . . . 6
3. PIGGYBACK REGISTRATIONS . . . . . . . . . . . . . . . . . . 8
(a) RIGHT TO PIGGYBACK REGISTRATIONS . . . . . . . . . . . 8
(b) PRIORITY ON PRIMARY REGISTRATIONS . . . . . . . . . . . 8
(c) PRIORITY ON SECONDARY REGISTRATIONS . . . . . . . . . . 8
(d) SELECTION OF UNDERWRITERS . . . . . . . . . . . . . . . 9
(e) OTHER REGISTRATIONS . . . . . . . . . . . . . . . . . . 9
(f) DECISION NOT TO FILE PIGGYBACK REGISTRATION STATEMENT . 9
4. HOLD-BACK AGREEMENTS . . . . . . . . . . . . . . . . . . . . 9
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE
SECURITIES . . . . . . . . . . . . . . . . . . . . . . 9
(b) REGISTRABLE SECURITIES ONLY . . . . . . . . . . . . . . 9
(c) RESTRICTIONS ON SALE OF EQUITY SECURITIES BY THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 10
5. REGISTRATION PROCEDURES . . . . . . . . . . . . . . . . . . 10
6. REGISTRATION EXPENSES . . . . . . . . . . . . . . . . . . . 14
(a) COMPANY EXPENSES . . . . . . . . . . . . . . . . . . . 14
(b) SELLING STOCKHOLDERS' COUNSEL . . . . . . . . . . . . . 14
(c) OTHER EXPENSES OF SELLING STOCKHOLDERS . . . . . . . . 15
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 15
(a) INDEMNIFICATION BY COMPANY . . . . . . . . . . . . . . 15
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES . 15
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS . . . . . . . . 16
(d) CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . 16
(e) SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . 17
8. RULE 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS . . . . . . . . 18
10. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . 18
(a) ANNUAL REPORTS . . . . . . . . . . . . . . . . . . . . 18
(b) QUARTERLY REPORTS . . . . . . . . . . . . . . . . . . . 18
(c) MONTHLY REPORTS . . . . . . . . . . . . . . . . . . . . 19
(d) BUDGETS . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) REQUESTED INFORMATION . . . . . . . . . . . . . . . . . 19
11. BOARD REPRESENTATION . . . . . . . . . . . . . . . . . . . . 19
12. CONSULTATION AND EXAMINATION . . . . . . . . . . . . . . . . 19
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13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 20
(a) NO INCONSISTENT AGREEMENTS . . . . . . . . . . . . . . 20
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES . . . . . 20
(c) REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 20
(d) AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . 20
(e) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 20
(f) SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . 21
(g) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . 21
(h) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . 21
(i) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 21
(j) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 21
(k) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . 21
(l) ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . 21
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of June 17, 2005, by and among EarthShell Corporation,
a Delaware corporation (the "Company"), and ReNewable Products LLC, a
Delaware limited liability company ("Stockholder").
This Agreement is being entered into in connection with the
Agreement and Plan of Merger among the Company, EarthShell Triangle,
Inc., a Delaware corporation and a wholly-owned subsidiary of the
Company ("Mergerco"), ReNewable Products, Inc., a Delaware corporation
and a wholly-owned subsidiary of Stockholder ("Target"), and
Stockholder (the "Merger Agreement"). In order to induce Stockholder
to enter into the Merger Agreement, the Company has agreed, among
other things, to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a
condition to the closing under the Merger Agreement.
The parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Common Stock" means the Company's common stock, par value $.01
per share.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Financial Statements" means with respect to any accounting
period for the Company and its subsidiaries, statements of income,
retained earnings, shareholders' equity or partners' capital and cash
flows of the Company and its subsidiaries for such period, and a
balance sheet of the Company and its subsidiaries as of the end of
such period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year if such
period is less than a full fiscal year or, if such period is a full
fiscal year, corresponding figures from the preceding annual audited
financial statements, all prepared in reasonable detail and in
accordance with U.S. generally accepted accounting principles,
consistently applied.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, limited liability company or other
business entity, or a government or agency or political subdivision
thereof.
"Preferred Stock" means the Company's Series C Convertible
Preferred Stock, par value $.01 per share.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by reference
in such prospectus.
"Public Offering" means any offering by the Company or selling
security holders of the Company's equity securities to the public
pursuant to an effective registration statement under the Securities
Act or any comparable statement under any comparable federal statute
then in effect.
"Registrable Securities" means the shares of Common Stock
issuable from time to time upon conversion of the shares of Preferred
Stock issued to Stockholder in the merger of Mergerco into Target
(whether such shares are issued to Stockholder or a transferee of the
Preferred Stock), including any Common Stock issued or issuable with
respect to the Registrable Securities by reason of any stock dividend
or stock split or in connection with any combination of shares,
recapitalization, merger, consolidation or other reorganization;
provided that a security ceases to be a Registrable Security when it
is no longer a Restricted Security.
"Registration Expenses" has the meaning set forth in Section 6.
"Registration Statement" means any registration statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits and all material incorporated by reference in
such registration statement.
"Restricted Security" means any Registrable Securities upon
original issuance thereof, and with respect to any particular such
security, so long as such security was acquired by the holder thereof
other than pursuant to an effective registration under Section 5 of
the Securities Act or pursuant to Rule 144 promulgated under the
Securities Act; provided that a security that has ceased to be a
Restricted Security cannot thereafter become a Restricted Security.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Underwritten Registration" or "Underwritten Offering" mean a
registration in which securities of the Company are sold to an
underwriter or underwriters on a firm commitment or best efforts basis
for reoffering to the public.
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2. DEMAND REGISTRATIONS
(a) RIGHT TO DEMAND REGISTRATIONS. The holders of at least 25%
of the Registrable Securities shall have the rights to request or
participate in registration under the Securities Act of Registrable
Securities (a "Demand Registration") as set forth below. Each request
for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated
per share price range for such offering. Within ten (10) days after
receipt of any such request, the Company shall give written notice of
such requested registration to all other holders of Registrable
Securities and shall include in such registration all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after the
receipt of the Company's notice by such other holders of Registrable
Securities, subject to Section 2(b). Demand Registrations may be made
on Form S-1 or any similar long- form registration ("Long-Form
Registrations"), but shall be made on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations") whenever the
Company is permitted to use any applicable short form. The Company
shall use its best efforts to make Short-Form Registrations on Form S-
3 available for the sale of Registrable Securities.
(b) LONG- AND SHORT-FORM REGISTRATIONS. At any time following
the six (6) month anniversary of the closing under the Merger
Agreement, the holders of at least 25% of the Registrable Securities
may request registration under the Securities Act of all or any
portion of the Registrable Securities, subject to the following:
(i) LONG-FORM REGISTRATIONS. The holders of Registrable
Securities shall be entitled to request (A) up to two (2) Long-Form
Registrations in which the Company shall pay all Registration Expenses
("COMPANY PAID LONG-FORM REGISTRATIONS") and (B) an unlimited number
of Long Form Registrations in which the holders of Registrable
Securities register and sell an aggregate of at least 1,000,000 shares
of Common Stock and in which the holders of Registrable Securities
shall pay their share of the Registration Expenses as set forth in
Section 6. A registration shall not count as one of the permitted
Company-paid Long-Form Registrations until it has become effective and
the holders of Registrable Securities are able to sell at least ninety
percent (90%) of the Registrable Securities requested to be included
in such registration; provided that in any event the Company shall pay
all Registration Expenses in connection with any registration
initiated as a Company paid Long-Form Registration, whether or not it
becomes effective or ultimately counts as one of the permitted Company
paid Long Form Registrations.
(ii) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations provided pursuant to Section 1(b)(i), the holders of at
least 25% of the Registrable Securities shall be entitled to request
up to two (2) Short-Form Registrations in which the Company shall pay
all Registration Expenses, provided that the aggregate number of
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Company paid Long-Form Registrations and Short-Form Registrations
shall not exceed three (3).
(iii) PARTICIPATION. The Company shall promptly give
written notice to all holders of Registrable Securities upon receipt
of a request for a Demand Registration pursuant to Section 2(a)(i)
above. The Company shall include in such Demand Registration such
Registrable Securities for which it has received written requests to
register within fifteen (15) days after such written notice has been
given.
(c) PRIORITY ON DEMAND REGISTRATIONS. The Company shall not
include in any Demand Registration any securities that are not
Registrable Securities without the prior written consent of the
holders of a majority of the Registrable Securities included in such
registration. If a Demand Registration is an underwritten offering
and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if
any, which can be sold in an orderly manner in such offering within a
price range acceptable to the holders of a majority of the Registrable
Securities to be included in such registration, without adversely
affecting the marketability or valuation of the offering, the Company
shall include in such registration the maximum number that the
managing underwriters advise, in the following priority: (i) first,
the Registrable Securities of the holders exercising one of their
rights to a Demand Registration, (ii) second, the number of
Registrable Securities owned by holders other than those exercising a
right to Demand Registration requested to be included in such
registration which in the opinion of such underwriters can be sold
without adverse effect, pro rata among the holders of such securities
on the basis of the number of such securities owned by each such
holder and (iii) third, securities other than Registrable Securities
requested to be included in such registration which in the opinion of
such underwriters can be sold without adverse effect, pro rata among
the holders of such securities on the basis of the number of such
securities owned by each such holder. Without the consent of the
Company and the holders of a majority of the Registrable Securities
included in such registration, any Persons other than holders of
Registrable Securities who participate in Demand Registrations which
are not at the Company's expense must pay their share of the
Registration Expenses as provided in Section 6.
(d) SELECTION OF UNDERWRITERS. The holders of a majority of the
Registrable Securities included in any Demand Registration shall have
the right to select the investment banker(s) and manager(s) to
administer the offering. The Company shall have the right to require
that any Demand Registration be an Underwritten Registration if it
determines that an underwriter is necessary to maintain an orderly
market for the Common Stock.
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(e) OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, the Company shall not grant to any Persons the right to
request the Company to register any equity securities of the Company,
or any securities convertible or exchangeable into or exercisable for
such securities, without the prior written consent of the holders of a
majority of the then outstanding Registrable Securities.
3. PIGGYBACK REGISTRATIONS
(a) RIGHT TO PIGGYBACK REGISTRATIONS. Whenever the Company
proposes to register any of its securities under the Securities Act
(other than pursuant to a Demand Registration hereunder) and the
registration form to be used may be used for the registration of
Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company shall
give prompt written notice (in any event within three business days
after its receipt of notice of any exercise of demand registration
rights other than under this Agreement) to all holders of Registrable
Securities of its intention to effect such a registration and, subject
to the priorities set forth in Sections 3(b) and 3(c), shall include
in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within
fifteen (15) days after the receipt of the Company's notice by such
holders of Registrable Securities.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in
an orderly manner in such offering within a price range acceptable to
the Company, the Company shall include in such registration the
maximum number that the managing underwriters advise, in the following
priority: (i) first, the securities the Company proposes to sell,
(ii) second, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned
by each such holder, and (iii) third, securities other than
Registrable Securities requested to be included in such registration
which in the opinion of such underwriters can be sold without adverse
effect, pro rata among the holders of such securities on the basis of
the number of such securities owned by each such holder.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities (other than a Demand Registration
requested by the holders of Registrable Securities pursuant to Section
2), and the managing underwriters advise the Company in writing that
in their opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the holders
of a majority of the Registrable Securities to be included in such
registration, the Company shall include in such registration the
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maximum number that the managing underwriters advise, in the following
priority: (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration,
pro rata among the holders of such Registrable Securities on the basis
of the number of Registrable Securities owned by each such holder, and
(iii) third, securities other than Registrable Securities requested to
be included in such registration which in the opinion of such
underwriters can be sold without adverse effect, pro rata among the
holders of such securities on the basis of the number of such
securities owned by each such holder.
(d) SELECTION OF UNDERWRITERS. In connection with any
underwritten Piggyback Registration, the Company shall have the right
to select the managing underwriters.
(e) OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant
to Section 2 or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall
not file or cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the Securities Act (except
on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a
period of at least one hundred eighty (180) days has elapsed from the
effective date of such previous registration.
(f) DECISION NOT TO FILE PIGGYBACK REGISTRATION STATEMENT. If,
after proposing to file a Piggyback Registration Statement in
connection with a primary offering, the Company decides not to file
the Piggyback Registration Statement, then the holders of Registrable
Securities requesting inclusion of their shares pursuant to Section
3(a)(i) will not be entitled to have their Registrable Securities
registered at such time, unless they elect to convert such
registration into a Demand Registration pursuant to Section 2(a).
4. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE
SECURITIES. Subject to the terms of Section 4(b), each holder of
Registrable Securities shall not effect any public sale or
distribution (including sales pursuant to Rule 144 under the
Securities Act) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities,
during the seven (7) days prior to and the subsequent ninety (90) day
period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which
Registrable Securities are included (except sales or distributions
made as part of such underwritten registration), unless the
underwriters managing the Public Offering otherwise agree.
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(b) REGISTRABLE SECURITIES ONLY. Anything contained in this
Agreement, including without limitation Section 4(a), to the contrary
notwithstanding, nothing herein contained shall be deemed or construed
to require any holder which owns securities of the Company acquired
other than by reason of the holding of Preferred Stock or the exercise
thereof, in whole or in part, to withhold such securities from sale
during any such period of time.
(c) RESTRICTIONS ON SALE OF EQUITY SECURITIES BY THE COMPANY.
The Company (i) shall not effect any public sale or distribution of
its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7)
days prior to and during the subsequent one hundred eighty (180) day
period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as
part of such underwritten registration or pursuant to registrations on
Form S-8 or any successor form), unless the underwriters managing the
Public Offering otherwise agree, and (ii) shall cause each holder of
its Common Stock, or any securities convertible into or exchangeable
or exercisable for Common Stock, purchased from the Company at any
time after the date of this Agreement (other than in a Public
Offering) to agree not to effect any public sale or distribution
(including sales pursuant to Rule 144) of any such securities during
such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the Public
Offering otherwise agree.
5. REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities
Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements
required by the SEC to be filed therewith, cooperate and assist in any
filings required to be made with the NASD, and use its best efforts to
cause such Registration Statement to become effective; provided that
before filing a Registration Statement or Prospectus or any amendments
or supplements thereto, the Company will furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the reasonable review of
such holders and underwriters, and the Company will not file any
Registration Statement or amendment thereto or any Prospectus or any
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supplement thereto to which the holders of a majority of shares of the
Registrable Securities covered by such Registration Statement or the
underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable
period, or such shorter period that will terminate when all
Registrable Securities covered by such Registration Statement have
been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus; the Company shall not be deemed to have used its
best efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that would result
in the selling holders of the Registrable Securities covered thereby
not being able to sell such Registrable Securities during that period
unless such action is required under applicable law, provided that the
foregoing shall not apply to actions taken by the Company in good
faith and for valid business reasons, including without limitation the
acquisition or divestiture of assets, so long as the Company promptly
thereafter complies with the requirements of Section 5(k), if
applicable;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by
the SEC for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (3) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose, (4) if at any time the representations and warranties of the
Company contemplated by paragraph (n) below cease to be true and
correct in any material respect, (5) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (6)
of the happening of any event which makes any statement made in the
Registration Statement, the Prospectus or any document incorporated
therein by reference untrue in any material respect or which requires
the making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in order
to make the statements therein not misleading;
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(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at
the earliest possible time;
(e) if requested by the managing underwriter or underwriters or
a holder of Registrable Securities being sold in connection with an
Underwritten Offering, promptly incorporate in a Prospectus supplement
or post-effective amendment such information as the managing
underwriters and the holders of a majority of shares of the
Registrable Securities being sold reasonably agree should be included
therein relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation, information
with respect to the principal amount of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of
the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(g) deliver to each selling holder of Registrable Securities and
the underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling holders of Registrable
Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any seller or underwriter reasonably
requests in writing and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided
that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process
in any such jurisdiction where it is not then so subject;
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(i) cooperate with the selling holders of Registrable Securities
and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at
least two business days prior to any sale of Registrable Securities to
the underwriters;
(j) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph
(c)(6) above, prepare a supplement or posteffective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(l) cause all Registrable Securities covered by the Registration
Statement to be listed, to the degree the Common Stock is so listed,
on each securities exchange on which the Common Stock is then listed
if requested by the holders of a majority of shares of such
Registrable Securities or the managing underwriters, if any;
(m) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable
Securities and provide the applicable transfer agents with printed
certificates for the Registrable Securities which are in a form
eligible for deposit with The Depository Trust Company;
(n) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration (1) make such representations and warranties
to the holders of such Registrable Securities and the underwriters, if
any, in form, substance and scope as are customarily made by issuers
to underwriters in primary Underwritten Offerings; (2) obtain opinions
of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of
a majority of shares of the Registrable Securities being sold)
addressed to each selling holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
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Underwritten Offerings; (3) obtain "cold comfort" letters and updates
thereof from the Company's independent registered public accountants
addressed to the selling holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with primary Underwritten
Offerings; and (4) deliver such documents and certificates as may be
requested by the holders of a majority of the Registrable Securities
being sold and the managing underwriters, if any, to evidence
compliance with clause (k) above and with any customary conditions
contained in the underwriting agreement or other agreement entered
into by the Company. The above shall be done at each closing under
such underwriting or similar agreement or as and to the extent
required thereunder;
(o) make available for inspection by a representative of the
holders of a majority of shares of the Registrable Securities, any
underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by the
selling holders or underwriters, all financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such
Registration Statement; provided that any records, information or
documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required by
court or administrative order; and
(p) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than forty-five (45)
days after the end of any 12-month period (or ninety (90) days, if
such period is a fiscal year) (1) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in an
Underwritten Offering, or (2) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement, which statements shall cover said 12-month periods.
6. REGISTRATION EXPENSES
(a) COMPANY EXPENSES. All expenses incident to the Company's
performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, fees and disbursements of custodians,
costs in connection with "road shows", and fees and disbursements of
counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and
11
other Persons retained by the Company (all such expenses being herein
called "Registration Expenses"), shall be borne by the Company unless
otherwise specifically provided in this Agreement, except that the
Company shall, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities
issued by the Company are then listed or on the NASD automated
quotation system, if the Company's securities are then NASDAQ-listed.
(b) SELLING STOCKHOLDERS' COUNSEL. In connection with each
Demand Registration and each Piggyback Registration, the Company shall
reimburse the holders of Registrable Securities included in such
registration for the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of the Registrable Securities
included in such registration.
(c) OTHER EXPENSES OF SELLING STOCKHOLDERS. To the extent
Registration Expenses are not required to be paid by the Company, each
holder of securities included in any registration hereunder shall pay
those Registration Expenses, including without limitation all
underwriting discounts and commissions, allocable to the registration
of such holder's securities so included, and any Registration Expenses
not so allocable shall be borne by all sellers of securities included
in such registration in proportion to the aggregate selling price of
the securities to be so registered.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, such holder's officers, directors, members and
partners and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation
and legal expenses) caused by or in any way relating to or arising out
of any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, Prospectus or preliminary Prospectus or
any amendment thereof or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder
expressly for use therein or by such holder's failure to deliver a
copy of the Registration Statement or Prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall indemnify such underwriters,
their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same
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extent as provided above with respect to the indemnification of the
holders of Registrable Securities. The payments required by this
Section 6(a) will be made periodically during the course of the
investigation or defense, as and when bills are received or expenses
incurred.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
holder of Registrable Securities participating in any Registration
Statement shall furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection
with such Registration Statement or any related Prospectus or
preliminary Prospectus and, to the extent permitted by law, shall
indemnify the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact
contained in such Registration Statement, Prospectus or preliminary
Prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by
such holder; provided that the obligation to indemnify shall be
individual, not joint and several, for each holder and shall be
limited to the net amount of proceeds received by such holder from the
sale of Registrable Securities pursuant to such Registration
Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled
to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall
not impair any Person's right to indemnification hereunder to the
extent such failure has not materially prejudiced the indemnifying
party) and (ii) unless in such indemnified party's reasonable judgment
a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such
consent shall not be unreasonably withheld). An indemnifying party
who is not entitled to, or elects not to, assume the defense of a
claim shall nevertheless pay the fees and expenses of counsel for the
indemnified party, provided that the indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel for
all indemnified parties with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. No indemnifying party
shall, without the consent of the indemnified party, consent to the
entry of any judgment or enter into any settlement which cannot be
13
settled in all respects by the payment of money (and such money is so
paid by the indemnifying party pursuant to the terms of such
settlement) or which settlement does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such
claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 7 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities
or expenses to which such indemnified party would be otherwise
entitled under Section 7, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party
and indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding. In no event shall any holder of Registrable Securities
be required to contribute an amount greater than the dollar amount of
the proceeds received by such holder with respect to the sale of any
Registrable Securities.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The contribution
provided for in this Section 7(d) shall remain in full force and
effect regardless of any investigation made by or on behalf of any
indemnified party.
(e) SURVIVAL. The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and
shall survive the transfer of securities. The Company also agrees to
14
make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. RULE 144
With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the Securities
Act or any similar rule or regulation of the SEC that may at any time
permit such holders to sell securities of the Company to the public
without registration, the Company agrees to: (a) make and keep public
information available, as those terms are understood and defined in
Rule 144 under the Securities Act; (b) file with the SEC in a timely
manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act (or, if the
Company is not required to file such reports, it will, upon the
request of the holders of a majority of the Registrable Securities
make publicly available other information as long as necessary to
permit sales pursuant to Rule 144 under the Securities Act); and (c)
furnish to the holders of Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied
with the reporting requirements of the Securities Act and the Exchange
Act, as set forth in Rule 144 under the Securities Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit such
holders to sell Registrable Securities pursuant to Rule 144 without
registration.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any registration hereunder which is
underwritten unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve such
arrangements; (b) completes and executes all customary questionnaires,
powers of attorney, customary indemnities, underwriting agreements and
other documents required under the terms of such underwriting
arrangements; provided that no holder of Registrable Securities
included in any underwritten registration shall be required to make
any representations or warranties to the Company or the underwriters
(other than representations and warranties regarding such holder, such
holder's ownership and title to the Registrable Securities, such
holder's intended method of distribution, and such other
representations and warranties are commonly given by selling
shareholders in underwritten offerings) or to undertake any
indemnification obligations to the Company or the underwriters with
respect thereto, except as otherwise provided in Section 7 hereof; (c)
provides all customary information reasonably requested by the Company
or underwriter in connection with such registration, including copies
of customary documents, instruments and agreements; and (d) complies
15
with all applicable federal and state securities laws in connection
with such registration.
10. FINANCIAL INFORMATION
So long as any shares of Preferred Stock remain outstanding, the
Company shall deliver the following to each holder of record of shares
of Preferred Stock:
(a) ANNUAL REPORTS. As soon as practicable and in no event
later than the earlier of (i) ninety (90) days after the close of each
fiscal year of the Company or (ii) the date on which the Financial
Statements referred to in this clause (a) are delivered to the
Company's board of directors, copies of the audited consolidated
Financial Statements of the Company and its subsidiaries, as audited
by the Company's independent registered public accountants, together
with copies of such accountant's opinions thereon and, to the extent
delivered, management letters delivered by such accountants in
connection with all such Financial Statements;
(b) QUARTERLY REPORTS. As soon as practicable and in no event
later than the earlier of (i) sixty (60) days after the last day of
each of the first three fiscal quarters of each fiscal year of the
Company or (ii) the date on which the Financial Statements referred to
in this clause (b) are delivered to the Company's board of directors,
a copy of the Financial Statements of the Company and its subsidiaries
(prepared on a consolidated basis) for such quarter and for the fiscal
year to date;
(c) MONTHLY REPORTS. As soon as possible, and in any event not
later than thirty (30) days after the end of each month, consolidated
balance sheets, statements of cash flow and statements of income of
the Company and its subsidiaries reflecting the most recently
completed month, setting forth, in each case, in comparative form
figures for the corresponding period in the previous fiscal year;
(d) BUDGETS. As soon as available, and in any event not later
than forty-five (45) days after the end of each fiscal year of the
Company, projected consolidated financial statements of the Company
and its subsidiaries for the next fiscal year, including budgets for
each month in such fiscal year; and
(e) REQUESTED INFORMATION. Such other instruments, agreements,
certificates, opinions, statements, documents and information relating
to the operations or condition (financial or otherwise) of the Company
and its subsidiaries as any holder of shares of Preferred Stock may
from time to time reasonably request.
11. BOARD REPRESENTATION
At any time from and after such time as all of the shares of
Preferred Stock owned by Stockholder have been converted into shares
16
of Common Stock, Stockholder shall have the right, at Stockholder's
election, to propose one candidate for nomination as a director of the
Company, and the board of directors of the Company (and any committee
of the board to which the responsibility for nominating directors may
be delegated in the future) shall nominate such candidate and use its
best efforts to cause such candidate to be elected as a director of
the Company. Stockholder shall have the right to direct the board of
directors to remove such director with or without cause. In the event
the candidate proposed by Stockholder ceases to be a director by
reason of resignation, removal, death or disability, Stockholder shall
have the right to propose his or her replacement, and the board of
directors of the Company use its best efforts to cause such
replacement to be elected as a director of the Company. Upon
expiration of the term of any director proposed by Stockholder,
Stockholder shall again have the right to propose a candidate for
nomination and election. Stockholder's rights pursuant to this
Section 10 shall terminate at such time as Stockholder owns less than
25% of the shares of Common Stock issuable upon conversion of the
Preferred Stock as of the date of the closing under the Merger
Agreement, as adjusted for any stock splits, combinations,
reclassifications or similar changes.
12. CONSULTATION AND EXAMINATION
For as long as Stockholder owns any shares of Preferred Stock or
Common Stock, (a) Stockholder shall be entitled to consult with and
advise management of the Company and its subsidiaries on significant
business issues, including the Company's and such subsidiaries'
management's proposed operating plans; (ii) the management of the
Company and each of such subsidiaries shall meet with Stockholder
regularly for such consultation and advice and to review progress in
achieving said plans; and (iii) the Company and each such subsidiary
shall permit Stockholder to examine the books and records of the
Company and such subsidiary and inspect its facilities at such times
as Stockholder shall determine. The foregoing shall not be deemed to
constitute an exhaustive list of the management services that
Stockholder may provide to the Company and its subsidiaries.
13. MISCELLANEOUS
(a) NO INCONSISTENT AGREEMENTS. The Company shall not hereafter
enter into any agreement with respect to its securities that is
inconsistent with or violates the rights granted to the holders of
Registrable Securities in this Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company
shall not take any action, or permit any change to occur, with respect
to its securities which would adversely affect the ability of the
holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement or
which would adversely affect the marketability or valuation of such
17
Registrable Securities in any such registration (including, without
limitation, effecting a stock split or a combination of shares).
(c) REMEDIES. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained
the written consent of holders of at least a majority of the
Registrable Securities; provided that no such amendment or action
which adversely and disproportionately affects a holder of Registrable
Securities vis-a-vis the other holders of Registrable Securities shall
be effective against such holder of Registrable Securities without the
prior written consent of such holder.
(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
registered first- class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to Stockholder, initially at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section 13(e), with a copy
to ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and
(ii) if to the Company, initially at EarthShell Corporation,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention ▇▇▇▇▇
▇. ▇▇▇▇▇▇, and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 13(e), with a
copy to, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered;
five business days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and on the next business day if timely delivered to an
air courier guaranteeing overnight delivery.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
18
the parties, including without limitation and without the need for an
express assignment, subsequent holders of Registrable Securities.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein with respect to the
registration rights granted by the Company hereunder. This Agreement
supersedes all prior agreements and understandings whether written or
oral and all contemporaneous oral agreements and understandings among
the parties with respect to such subject matter.
(l) ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
19
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
EARTHSHELL CORPORATION
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CFO
RENEWABLE PRODUCTS LLC
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: VP
20
