EXHIBIT 4.1
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "AGREEMENT") is entered into as of
December 9, 2005, by and among EarthShell Corporation, a Delaware corporation
(the "COMPANY") and the purchasers of the Company's Common Stock ("COMMON
STOCK") set forth on Schedule 1 of that certain Letter Agreement of even date
herewith (the "LETTER AGREEMENT") and Schedule 1 hereto and the grantees under
the Warrant Agreements (the "WARRANT AGREEMENTS") issued as set forth in the
Letter Agreement. The purchasers of the Common Stock and grantees under the
Warrant Agreements shall be referred to hereinafter as the "INVESTORS" and each
individually as an "INVESTOR."
PRELIMINARY STATEMENTS
A. As of the date hereof, the Company has sold and issued Two Hundred
Sixty-Six Thousand Six-Hundred Sixty-Seven (266,667) shares of Common Stock
pursuant to the Letter Agreement and the related Stock Purchase Agreement and
One Million Thirty-Three Thousand Three Hundred Thirty-Three (1,033,333) shares
of its Common Stock pursuant to the Letter Agreement and the related Warrant
Agreements, as set forth in the Letter Agreement.
B. As a condition of entering into the Letter Agreement, the Investors
have requested that the Company extend to them registration rights as set forth
below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Letter Agreement and for other good, valuable and binding consideration, the
parties hereto, intending to be legally bound hereby, mutually agree as follows:
I. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.9 hereof.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued to
Investors pursuant to the Letter Agreement, Stock Purchase Agreement or Warrant
Agreements; and (b) any Common Stock of the Company issued as (or issuable upon
the exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding the foregoing,
Registrable Securities shall not include any securities eligible to be sold by a
person to the public pursuant to a registration statement or Rule 144 under the
Securities Act or sold in a private transaction in which the transferor's rights
under Section 2 of this Agreement are not assigned.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 2.1, 2.2 and 2.3 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (including the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale.
"SHARES" means the Company's Common Stock issued pursuant to the Stock
Purchase Agreement or Warrant Agreements and held by the Investors listed on
schedule 1 hereto and their permitted assigns.
II. REGISTRATION
2.1 DEMAND REGISTRATION.
(a) Subject to the conditions hereof and applicable law, rule or
regulation, if the Company shall receive a written request from the Holders of
twenty-five percent of the Registrable Securities (the "INITIATING HOLDERS")
that the Company file a registration statement under the Securities Act covering
the registration of at least twenty-five percent of the Registrable Securities
(a "QUALIFIED PUBLIC OFFERING"), then the Company shall, within thirty (30) days
of the receipt thereof, give written notice of such request to all Holders, and
subject to the limitations of this Section 2.1, use its best efforts to effect,
as soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request within ten days of the delivery
of the Company's notice to be registered.
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(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.1
or any request pursuant to Section 2.3 and the Company shall include such
information in the written notice referred to in Section 2.1(a) or Section
2.3(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.1 or Section 2.3, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities) then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.1:
(i) if the Company has effected one (1) registrations pursuant
to this Section 2.1, and such registrations have been declared or ordered
effective; or
(ii) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 2.3 below.
2.2 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least fifteen (15) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder, unless the Company is otherwise prohibited from
doing so due to an agreement outstanding as of the date hereof or by applicable
law, rule or regulation. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
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(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis, unless the Company is required to effect a different allocation due to an
agreement outstanding as of the date hereof or by law or applicable law, rule or
regulation. No such reduction shall reduce the amount of securities of the
selling Holders included in the registration below twenty-five percent (25%) of
the total amount of securities included in such registration, unless the Company
is required to do so due to an agreement outstanding as of the date hereof or by
law or applicable law, rule or regulation. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing person shall be
deemed to be a single "Holder", and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
(b) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.4 hereof.
2.3 FORM S-3 REGISTRATION. Subject to the conditions hereof and applicable
law rules or regulation, in the event the Company shall receive from any Holder
or Holders of Registrable Securities a written request or requests that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement with respect to all or a part of the
Registrable Securities owned by such Holder or Holders in excess of an aggregate
of hundred-thousand shares of Registrable Securities, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
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(b) as soon as practicable, file a registration statement on Form
S-3 and effect such registration as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.3 if Form
S-3 (or any successor or similar form) is not available for such offering by the
Holders.
2.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.1 or any registration under Section 2.2 or Section 2.3 herein shall be
borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to thirty (30) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in paragraph (a) above.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) [Intentionally omitted.]
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is, to its
knowledge, required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
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(g) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.6 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect if
all Registrable Securities held by and issuable to such Holder (and its
affiliates, partners, former partners, members and former members) may be sold
under Rule 144 during any ninety (90) day period.
2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.1, 2.2 or 2.3 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.1 or Section 2.3 if the number of
shares of the Registrable Securities to be included in the registration does not
equal or exceed the number of shares required to originally trigger the
Company's obligation to initiate such registration as specified in Section 2.1
or Section 2.3, whichever is applicable.
2.8 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 2.1, 2.2 or 2.3:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 2.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
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(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under a writing
provided to the Company by such Holder and stated to be for use in connection
with such registration; and each such Holder will pay as incurred any legal or
other expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.8(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that in no event shall any
indemnity under this Section 2.8 exceed the proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.
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(d) If the indemnification provided for in this Section 2.8 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section
2.8 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which 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.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired member of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, or (c) acquires at least ten thousand (10,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (i) the transferor shall, within ten (10) days
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
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2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 2.10 shall be binding upon each Holder and the Company. By acceptance of
any benefits under this Section 2, Holders of Registrable Securities hereby
agree to be bound by the provisions hereunder.
2.11 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the Registrable Securities then outstanding, enter into
any agreement with any holder or prospective holder of any securities of the
Company that would grant such holder registration rights senior to those granted
to the Holders hereunder.
2.12 RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act; a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
III. MISCELLANEOUS
3.1 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 entered into and to be performed entirely within California.
3.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
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3.3 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
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such shares in its records as the absolute owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.
3.4 ENTIRE AGREEMENT. This Agreement and the Exhibit and Schedule hereto,
the Letter Agreement, the Stock Purchase Agreement and the Warrant Agreements
and the other documents delivered pursuant thereto constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
3.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided herein, this Agreement
may be amended or modified only upon the written consent of the Company and the
holders of at least a majority of the Registrable Securities.
(b) Except as otherwise expressly provided herein, the obligations
of the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least a majority of the
Registrable Securities.
3.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such 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
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder'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. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
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3.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by facsimile if sent during normal business
hours of the recipient; if not, then on the next business day, (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as set forth on the signature pages hereof or Schedule 1
hereto or at such other address as such party may designate by ten (10) days
advance written notice to the other parties hereto.
3.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
3.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
3.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be executed by facsimile
signature.
11
IV. LIMITATION ON EARTHSHELL CORPORATION DIRECT LIABILITY
Notwithstanding any provision to the contrary in this Investor Rights
Agreement, the letter agreement, dated December 9, 2005, between EarthShell
Corporation and EarthShell Asia, Limited, pursuant to which this Investor Rights
Agreement has been issued, or the agreements and letters to be delivered
pursuant to the terms of such letter agreement, if EarthShell Corporation
defaults under the terms of this Investor Rights Agreement, the letter
agreement, dated December 9, 2005, between EarthShell Corporation and EarthShell
Asia, Limited, pursuant to which this Investor Rights Agreement has been issued,
and/or the agreements and letters to be delivered pursuant to the terms of such
letter agreement, EarthShell Asia, Limited, each of the signatories to the
agreements delivered pursuant to the letter agreement, including the Investor
under this Investor Rights Agreement, each of the holders of EA Shares and EA
Warrants, as defined in such letter agreement, individually and collectively,
shall under no circumstances be entitled to recover or collect directly from
EarthShell Corporation, whether by Fee Damages, as such term is defined in the
letter agreement, or judgment for damages or otherwise, an aggregate amount for
any and all EarthShell Corporation defaults which exceeds the total of (i)
$900,000, plus (ii) the total of all Technology Fees paid by EarthShell Asia,
Limited to EarthShell Corporation under the terms of the Asian Sublicense
Agreements, as such term is defined in the letter agreement, plus (iii) the
total of all royalties paid by EarthShell Asia, Limited to EarthShell under the
terms of the Five Sublicenses, as such term is defined in the letter agreement,
prior to the date of such collection or recovery. To the extent one or more
judgments is not satisfied in full directly from EarthShell Corporation because
of the foregoing limitation on EarthShell Corporation's direct liability, the
balance or balances may be withheld by EarthShell Asia, Limited from future
Technology Fee or royalty payments otherwise due from EarthShell Asia, Limited
to EarthShell Corporation under the terms of the Five Sublicenses, as such term
is defined in the letter agreement, and applied by EarthShell Asia, Limited to
such balance or balances, whether the balance or balances are owed to EarthShell
Asia, Limited, a signatory to an agreement delivered pursuant to the letter
agreement or to a holder of EA Shares or EA Warrants, as such terms are defined
in the letter agreement.
[signature page follows]
12
IN WITNESS WHEREOF, the parties hereto have executed this INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof
COMPANY: EarthShell Corporation
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
INVESTORS:
/s/ Xxxxxx X. Xxxxxxxxx, Trustee
-----------------------------------------
Xxxxxx X. Xxxxxxxxx, as trustee of the
Xxxxxx X. Xxxxxxxxx Trust
/s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxx Xxxxx
-----------------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxx
-----------------------------------------
Xxxx Xxxx
[Signature Page to Investors Rights Agreement]
SCHEDULE 1
SCHEDULE OF INVESTORS
---------------------
166,667 PREVIOUSLY PURCHASED EA SHARES
--------------------------------------
NAME NUMBER OF SHARES
----------------------------------------------------------- --------------------
Xxxx Xxxx 83,333
----------------------------------------------------------- --------------------
Xxxxx Xxxxx 33,333
----------------------------------------------------------- --------------------
Xxxxxx X. Xxxxxxxxx, 33,333
as trustee of the Xxxxxx X. Xxxxxxxxx Trust
----------------------------------------------------------- --------------------
Xxxx Xxxxxxx 16,668
----------------------------------------------------------- --------------------
TOTAL 166,667
----------------------------------------------------------- --------------------
100,000 ADDITIONAL EA SHARES
----------------------------
NAME NUMBER OF SHARES
----------------------------------------------------------- --------------------
Xxxxxx X. Xxxxxxxxx, 50,000
as trustee of the Xxxxxx X. Xxxxxxxxx Trust
----------------------------------------------------------- --------------------
Xxxx Xxxxxxx 50,000
----------------------------------------------------------- --------------------
TOTAL 100,000
----------------------------------------------------------- --------------------
