EXHIBIT 1.1
EarthShell Corporation
10,560,000 Shares (1)
Common Stock
($.01 par value)
U.S. Underwriting Agreement
New York, New York
March , 1998
Xxxxx Xxxxxx Inc.
Credit Suisse First Boston Corporation
As U.S. Representatives of the several
U.S. Underwriters,
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
EarthShell Corporation, a Delaware corporation (the "Company"), and
the persons named in Schedule II hereto (the "Selling Stockholders"), propose
to sell to the underwriters named in Schedule I hereto (the "U.S.
Underwriters"), for whom you (the "U.S. Representatives," together with the
International Representatives, as defined in the International Underwriting
Agreement, being hereinafter called the "Representatives") are acting as
representatives, 10,560,000 shares of Common Stock, par value $.01 ("Common
Stock"), of the Company (said shares to be issued and sold by the Company and
shares to be sold by the Selling Stockholders collectively being hereinafter
called the "U.S. Underwritten Securities"). The Company and certain of the
Selling Stockholders (the "Contributing Stockholders") also propose to grant
to the U.S. Underwriters an option to purchase up to 1,584,000 additional
shares of Common Stock (the "U.S. Option Securities"; the U.S. Option
Securities, together with the U.S. Underwritten Securities, being hereinafter
called the "U.S. Securities"). It is understood that the Company and the
Selling Stockholders are concurrently entering into an International
Underwriting Agreement dated the date hereof (the "International Underwriting
Agreement") providing for the sale by the Company and the Selling
Stockholders of an aggregate of 2,640,000 shares of Common Stock (said shares
to be sold by the Company and the Selling Stockholders) pursuant to the
International Underwriting Agreement being hereinafter called the
"International Underwritten Securities", and providing for the grant to the
International Underwriters, as
--------------------
(1) Plus an option to purchase from Earthshell Corporation and certain of
the Selling Stockholders up to 1,584,000 additional shares to cover
over-allotments.
defined in the International Underwriting Agreement (the International
Underwriters, together with the U.S. Underwriters, being hereinafter called the
"Underwriters") of an option to purchase from the Company and the Contributing
Stockholders up to 396,000 additional shares of Common Stock (the "International
Option Securities"; the International Option Securities, together with the
International Underwritten Securities, being hereinafter called the
"International Securities" and the U.S. Securities, together with the
International Securities, being hereinafter called the "Securities"). It is
further understood and agreed that the International Underwriters and the U.S.
Underwriters have entered into an Agreement Between U.S. Underwriters and
International Underwriters dated the date hereof (the "Agreement Between U.S.
Underwriters and International Underwriters"), pursuant to which, among other
things, the International Underwriters may purchase from the U.S. Underwriters a
portion of the U.S. Securities to be sold pursuant to the U.S. Underwriting
Agreement and the U.S. Underwriters may purchase from the International
Underwriters a portion of the International Securities to be sold pursuant to
the International Underwriting Agreement. To the extent there are no additional
U.S. Underwriters listed on Schedule I other than you, the term U.S.
Representatives as used herein shall mean you, as U.S. Underwriters, and the
terms U.S. Representatives and U.S. Underwriters shall mean either the singular
or plural as the context requires.
1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and agrees with,
each U.S. Underwriter as set forth below in this Section 1. Certain terms used
in this Section 1 are defined in Section 17 hereof.
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 333-13287) on Form S-1, including related preliminary prospectuses,
for the registration under the Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectuses, each of which has
previously been furnished to you. The Company will next file with the
Commission either (A) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including
the form of final prospectus) or (B) after the Effective Date of such
registration statement, final prospectuses in accordance with Rules 430A
and 424(b)(1), (3) or (4). In the case of clause (B), the Company has
included in such registration statement, as amended at the Effective Date,
all information (other than, at the option of the Company, Rule 430A
Information) required by the Act and the rules thereunder to be included in
such registration statement and the Prospectuses. As filed, such amendment
and form of final prospectuses, or such final prospectuses (the
"Registration Statement"), shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the U.S. Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information
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and other changes (beyond that contained in the latest U.S. Preliminary
Prospectus) as the Company has advised you, prior to the Execution Time,
will be included or made therein.
It is understood that two forms of prospectus are to be used
in connection with the offering and sale of the Securities: one form of
prospectus relating to the U.S. Securities, which are to be offered and
sold to United States and Canadian Persons, and one form of prospectus
relating to the International Securities, which are to be offered and sold
to persons other than United States and Canadian Persons. The two forms of
prospectus are identical except for the outside front cover page, the
inside front cover page, the discussion under the headings "Underwriting"
and "Subscription and Sale" and the outside back cover page. Such form of
prospectus relating to the U.S. Securities as first filed pursuant to
Rule 424(b) after the Execution Time or, if no filing pursuant to
Rule 424(b) is made, such form of prospectus included in the Registration
Statement at the Effective Date, is hereinafter called the "U.S.
Prospectus"; such form of prospectus relating to the International
Securities as first filed pursuant to Rule 424(b) after the Execution Time
or, if no filing pursuant to Rule 424(b) is made, such form of prospectus
included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus"; and the U.S. Prospectus
and the International Prospectus are hereinafter collectively called the
"Prospectuses."
(ii) On the Effective Date, the Registration Statement
did or will, and when the Prospectuses are first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein) and
on any date on which shares sold in respect of the Underwriters'
over-allotment option are purchased, if such date is not the Closing Date
(a "settlement date"), each Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, each
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement, or the
Prospectuses (or any supplement thereto) in reliance upon and in conformity
with information furnished herein or in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectuses (or any
supplement thereto).
(iii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own its properties and
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conduct its business as described in the Prospectuses, and is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such qualification.
(iv) The Company's authorized equity capitalization is
as set forth in the Prospectuses; the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Prospectuses; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters, will be fully paid and
nonassessable; the Securities have been duly authorized for listing,
subject to official notice of issuance and evidence of satisfactory
distribution on The Nasdaq Stock Market's National Market (the "Nasdaq
National Market"); the certificates for the Securities are in valid and
sufficient form and, in all material respects, are duplicative of the
specimen certificate filed as an exhibit to the Registration Statement; the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Securities,
except which rights have been effectively satisfied or waived; and, except
as set forth in the Registration Statement, the Company has not issued or
granted any options, warrants or other rights to purchase, agreements or
other obligations to issue, or issued or granted any rights to convert any
obligations into or exchange any securities for, shares of capital stock of
or ownership interests in the Company, except for any of the foregoing
which have expired or terminated or which are otherwise no longer
outstanding.
(v) There is no franchise, contract or other document
of a character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectuses under the
headings "Certain United States Federal Income Tax Considerations" and
"Shares Eligible for Future Sale" fairly summarize the matters therein
described.
(vi) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(vii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(viii) No consent, approval, authorization, filing with
or order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction inside or outside of the United States
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in connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectuses.
(ix) Neither the issue and sale of the Securities nor
the consummation of any other of the transactions contemplated herein nor
the fulfillment of the terms hereof will conflict with, result in a breach
or violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, (i) the charter or by-laws
of the Company or (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company is a
party or bound or to which its property is subject, or (iii) any statute,
law, rule, regulation, judgment, order or decree applicable to the Company
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any
of its properties.
(x) No holders of securities of the Company have
pre-emptive rights or the right to the registration of such securities
under the Registration Statement, or if such rights exist, they have been
validly and legally satisfied or waived and will not be violated by the
transactions contemplated in this Agreement.
(xi) The consolidated financial statements and
schedules of the Company included in the Prospectuses and the Registration
Statement present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates and for
the periods indicated, comply as to form with the applicable accounting
requirements of the Act and the rules and regulations thereunder and have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under the
caption "Selected Financial Data" in the Prospectuses and Registration
Statement fairly present, on the basis stated in the Prospectuses and the
Registration Statement, the information included therein.
(xii) No action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving
the Company or its property is pending or, to the best knowledge of the
Company, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectuses (exclusive of any supplement thereto) (a "Material Adverse
Effect").
(xiii) The Company owns or leases all such properties as
are necessary to the conduct of its operations as presently conducted; the
Company is not in
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violation of any law, rule or regulation of any Federal, state or local
governmental or regulatory authority applicable to it or is not in
non-compliance with any term or condition of, or has failed to obtain and
maintain in effect, any license, certificate, permit or other governmental
authorization required for the ownership or lease of its property or the
conduct of its business, which violation, non-compliance or failure would
individually or in the aggregate have a Material Adverse Effect; and the
Company has not received notice of any proceedings relating to the
revocation or material modification of any such license, certificate,
permit or other authorization.
(xiv) The Company is not in violation or default of
(i) any provision of its charter or by-laws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which it is a party or bound or to which its property is subject, or
(iii) any statute, law, rule or regulation, or any judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
any of its properties, as applicable.
(xv) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and delivered their report with respect
to the audited consolidated financial statements and schedules included in
the Prospectuses, are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published rules
and regulations thereunder.
(xvi) There are no transfer taxes or other similar fees
or charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the Company or sale by
the Company of the Securities.
(xvii) The Company has filed all foreign, federal, state
and local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes required
to be paid by it and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except for
any such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect.
(xviii) No labor disturbance by or dispute with the
employees of the Company exists or is threatened or imminent that could
result in a Material Adverse Effect.
(xix) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as are prudent and customary in the businesses in which they are engaged;
the Company has not been refused any insurance coverage sought or applied
for; and the Company has no reason to
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believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect.
(xx) The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct its businesses, and the
Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.
(xxi) The Company is not in violation of any federal or
state law or regulation relating to occupational safety and health or to
the storage, handling or transportation of hazardous or toxic materials and
the Company has received all permits, licenses or other approvals required
of it under applicable federal and state occupational safety and health and
environmental laws and regulations to conduct its business, and the Company
is in compliance with all terms and conditions of any such permit, license
or approval, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals which
would not, singly or in the aggregate, result in a Material Adverse Effect.
(xxii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiii) The Company owns or has obtained licenses for the
patents, patent applications, trade and service marks, trade secrets and
other intellectual properties referenced or described in the Prospectuses
as being owned by or licensed to it (collectively, the "Intellectual
Property"). Except as set forth in the Prospectuses under the caption
"Business--Patents, Proprietary Rights and Trademarks," (a) to the
Company's knowledge, there are no rights of third parties to any such
Intellectual Property; (b) to the Company's knowledge, there is no material
infringement by third parties of any such Intellectual Property; (c) there
is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to any
such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (d) to the Company's
knowledge, there is no pending or threatened action, suit, proceeding or
claim by others
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challenging the validity or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis
for any such claim; (e) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company is unaware of any other fact which would form a reasonable basis
for any such claim; (f) to the Company's knowledge, there is no Patent
or published Patent application which contains claims that infringe any
Intellectual Property described in the Prospectuses as being owned by or
licensed to the Company or that interferes with the issued or pending
claims of any such Intellectual Property; and (g) to the Company's
knowledge, there is no prior art that may render any Patent licensed to
the Company invalid or any Patent application licensed to the Company
unpatentable which has not been disclosed to the Patent and Trademark
Office. The Company owns the Intellectual Property or has the rights to
the Intellectual Property that is necessary to conduct its business as
described in the Prospectuses.
(xxiv) Except as disclosed in the Registration Statement
and the Prospectuses, the Company (i) does not have any material lending or
other relationship with any bank or lending affiliate of Salomon Brothers
Inc, Xxxxx Xxxxxx Inc. or Credit Suisse First Boston Corporation, and
(ii) does not intend to use any of the proceeds from the sale of the
Securities hereunder to repay any outstanding debt owed to any affiliate of
Salomon Brothers Inc, Xxxxx Xxxxxx Inc., Credit Suisse First Boston
Corporation or any other Underwriter, except for cumulative dividends and
accrued interest payable upon redemption of the Company's Series A
Cumulative Senior Convertible Preferred Stock.
(xxv) The Company does not own or control, either
directly or indirectly, any other corporation or the capital stock of any
other corporation.
(xxvi) Except as disclosed in the Prospectuses, there are
no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment
in connection with the Offering.
(xxvii) Except as disclosed in the Prospectuses, the
Company has good and marketable title to all properties and assets owned by
it, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use
made or to be made thereof by it; and except as disclosed in the
Prospectuses, the Company holds any leased real or personal property under
valid and enforceable leases with no exceptions that would materially
interfere with the use or to be made thereof by them.
(xxviii) Since the date of the latest audited financial
statements included in the Prospectuses, there has been no material adverse
change, nor any development or event involving a prospective material
adverse change, in the condition
8
(financial or otherwise), business, prospects, properties or results of
operations of the Company, and, except as disclosed in or contemplated by
the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xxix) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company or other agreements or
transactions with, to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of
them, except as disclosed in the Registration Statement and the
Prospectuses.
(xxx) The Company has complied with all provisions of
Section 517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliated located in Cuba.
(xxxi) Unless otherwise agreed to in writing by the
Representatives, the Company has furnished to the Representatives a letter
substantially in the form of Exhibit A hereto from each officer, director
and stockholder of the Company addressed to the Underwriters, in which each
such person has agreed that, until such date which is (a) 270 days after
the Closing Date if such person is a Selling Stockholder or (b) 180 days
after the Closing Date if such person is not a Selling Stockholder, without
the prior written consent of Salomon Brothers Inc, such person will not,
directly or indirectly, offer, sell, contract to sell, grant any option or
warrant for the sale of, register, loan, pledge, grant any rights with
respect to, or otherwise transfer or dispose of any shares of capital stock
of the Company or securities convertible into or exchangeable or
exercisable for, or any rights to purchase or acquire, such shares of
capital stock, including, without limitation, Common Stock which now or
hereafter may be deemed to be beneficially owned by such person, subject to
certain exceptions specified therein. It is understood that as joint
book-running managers Salomon Brothers Inc and Xxxxx Xxxxxx Inc., on the
one hand, and Credit Suisse First Boston Corporation, on the other hand,
have agreed not to release the Company or any stockholders of the Company
from any restriction on transactions relating to the Company's securities
without the written consent of the other.
(xxxii) The Amended and Restated License Agreement between
the Company and E. Khashoggi Industries, LLC ("EKI") (the "Amended and
Restated License Agreement") has been duly authorized, executed and
delivered and is a legal, valid and binding agreement, enforceable against
EKI in accordance with its terms.
(xxxiii) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on which
U.S. Option Securities are to be purchased, as the case may be, and (ii)
completion of the distribution of the Securities, any offering material in
connection with the offering and sale of the Securities
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other than any Preliminary Prospectuses, the Prospectuses, the Registration
Statement and other materials, if any, permitted by the Act.
(xxxiv) The Company has not at any time during the last
five (5) years (i) made any unlawful contribution to any candidate for
foreign office or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer
or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(xxxv) The Company has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities
and has not effected any sales of shares of Common Stock which, if effected
by the issuer, would be required to be disclosed in response to Item 701 of
Regulation S-K, except as set forth in the Registration Statement.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each U.S. Underwriter.
(b) Each Selling Stockholder, severally and not jointly,
represents and warrants to, and agrees with, each U.S. Underwriter that:
(i) Such Selling Stockholder is the lawful owner of
the Securities to be sold by such Selling Stockholder hereunder and under
the International Underwriting Agreement and upon sale and delivery of, and
payment for, such Securities, as provided herein, such Selling Stockholder
will convey good and marketable title to such Securities, free and clear of
all liens, encumbrances, equities and claims whatsoever.
(ii) Such Selling Stockholder has no reason to believe
that the discussion contained under the caption "Principal and Selling
Stockholders" contained in the Registration Statement and Prospectuses is
not true and correct.
(iii) Such Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under
the Exchange Act or otherwise, in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities and has not effected any sales of shares of Common Stock
which, if effected by the issuer, would be required to be disclosed in
response to Item 701 of Regulation S-K.
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(iv) Certificates in negotiable form for such Selling
Stockholder's Securities have been placed in custody, for delivery pursuant
to the terms of this Agreement, under a Custody Agreement and Power of
Attorney duly authorized, executed and delivered by such Selling
Stockholder, in the form heretofore furnished to you (the "Custody
Agreement and Power of Attorney") with U.S. Stock Transfer Corporation, as
Custodian (the "Custodian"); the Custody Agreement and Power of Attorney is
a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms; the Securities represented by the certificates
so held in custody for each Selling Stockholder are subject to the
interests hereunder of the Underwriters, the Company and the other Selling
Stockholders; the arrangements for custody and delivery of such
certificates, made by such Selling Stockholder hereunder and under the
Custody Agreement and Power of Attorney, are not subject to termination by
any acts of such Selling Stockholder, or by operation of law, whether by
the death or incapacity of such Selling Stockholder or the occurrence of
any other event; and if any such death, incapacity or any other such event
shall occur before the delivery of such Securities hereunder, certificates
for the Securities will be delivered by the Custodian in accordance with
the terms and conditions of this Agreement and the Custody Agreement and
Power of Attorney as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian shall have received
notice of such death, incapacity or other event.
(v) No consent, approval, authorization, filing with
or order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction inside or outside of the United States in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectuses.
(vi) Except as disclosed in the Prospectuses, there are
no contracts, agreements or understandings between the Selling Stockholders
and any person, including the Company, that would give rise to a valid
claim against the Selling Stockholder, the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
the Offering.
(vii) Neither the sale of the Securities being sold by
such Selling Stockholder, nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder, or the
fulfillment of the terms hereof by such Selling Stockholder will conflict
with, result in a breach or violation of, or constitute a default under any
law or the charter or by-laws or trust documents of such Selling
Stockholder or the terms of any indenture or other agreement or instrument
to which such Selling Stockholder, or any of its subsidiaries is a party or
bound, or any judgment, order or decree applicable to such Selling
Stockholder, or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over such Selling Stockholder, or any of its subsidiaries.
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(viii) Such Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection
with the offering and sale of the Securities.
(ix) Such Selling Stockholder has reviewed the
"Principal and Selling Stockholders" section of the Prospectuses and will
comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the
Closing Date and will advise one of its Attorneys and Xxxxx Xxxxxx Inc.,
prior to the Closing Date if any statement to be made on behalf of such
Selling Stockholder contemplated hereunder would be inaccurate if made as
of the Closing Date.
(x) Such Selling Stockholder does not have, or has
waived prior to the date hereof, any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any of the
Securities that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement; such Selling
Stockholder does not have, or has waived prior to the date hereof, any
registration right or other similar right to participate in the offering
made by the Prospectuses, other than such rights of participation as have
been satisfied by the participation of such Selling Stockholder in the
transactions to which this Agreement relates in accordance with the terms
of this Agreement; and such Selling Stockholder does not own any warrants,
options or similar rights to acquire, and does not have any right or
arrangement to acquire, any capital stock, rights, warrants, options or
other securities from the Company, other than those described in the
Registration Statement and the Prospectuses.
(xi) Such Selling Stockholder has executed and
furnished to the Company a letter substantially in the form of Exhibit A
hereto addressed to the U.S. Representatives, in which such Selling
Stockholder has agreed that, until such date which is 270 days after the
Closing Date, without the prior written consent of Salomon Brothers Inc,
such Selling Stockholder will not, directly or indirectly, offer, sell,
contract to sell, grant any option or warrant for the sale of, register,
loan, pledge, grant any rights with respect to, or otherwise transfer or
dispose of any shares of capital stock of the Company or securities
convertible into or exchangeable or exercisable for, or any rights to
purchase or acquire, such shares of capital stock, including, without
limitation, Common Stock which now or hereafter may be deemed to be
beneficially owned by such Selling Stockholder, subject to certain
exceptions provided therein It is understood that as joint book-running
managers Salomon Brothers Inc and Xxxxx Xxxxxx Inc., on the one hand, and
Credit Suisse First Boston Corporation, on the other hand, have agreed not
to release the Company or any stockholders of the Company from any
restriction on transactions relating to the Company's securities without
the written consent of the other.
(xii) Such Selling Stockholder will cooperate to the
extent necessary to cause the Registration Statement or any post-effective
amendment thereto to become effective at the earliest possible time.
(xiii) Such Selling Stockholder has no reason to
believe that the Preliminary Prospectuses dated February 24, 1998
contained any untrue statements of fact that would be considered
material by an investor or failed to contain material facts necessary to
make the statements contained therein, in light of the circumstances
under which they were made, not misleading; it being understood that
such Selling Stockholder has neither verified, nor made any independent
investigation, search or inquiry of, any facts or statements made in the
Preliminary Prospectuses.
12
(c) EKI represents and warrants to, and agrees with, each U.S.
Underwriter that:
(i) EKI has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own its properties and conduct its business, and is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification.
(ii) This Agreement has been duly authorized, executed
and delivered by EKI and constitutes a valid and binding obligation of EKI
enforceable in accordance with its terms.
(iii) No consent, approval, authorization, filing with
or order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction inside or outside of the United States in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectuses.
(iv) The Amended and Restated License Agreement has
been duly authorized, executed and delivered and is a legal, valid and
binding agreement, enforceable against EKI in accordance with its terms.
(v) No action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving
EKI or its property is pending or, to the best knowledge of EKI, threatened
that (i) could reasonably be expected to have a material adverse effect on
the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected to
have a material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of EKI, taken as a whole,
whether or not arising from transactions in the ordinary course of
business.
(vi) EKI is not in violation or default of and the
consummation of the transactions herein contemplated will not give rise to
a claim of violation or default of (i) any provision of its charter or
by-laws, (ii) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other material agreement,
obligation, condition, covenant or instrument to which it is a party or
bound or to which its property is subject, or (iii) any statute, law, rule
or regulation, or any judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over EKI or any of its properties, as
applicable.
(vii) On the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, each Prospectus, if not
filed pursuant to Rule 424(b), will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date and any settlement date,
each Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that EKI makes no representations or warranties as to the
information contained in or omitted from the Registration Statement, or
the Prospectuses (or any supplement thereto) in reliance upon and in
conformity with information furnished herein or in writing to EKI by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Registration Statement or the Prospectuses (or any
supplement thereto).
13
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company and each Selling
Stockholder agrees, severally and not jointly, to sell to the U.S. Underwriters
the amount of U.S. Underwritten Securities set forth opposite such person's name
on Schedule II, and each U.S. Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, at a purchase price of
$____ per share, the amount of the U.S. Underwritten Securities set forth
opposite such U.S. Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, each Contributing Stockholder
hereby grants an option to the several U.S. Underwriters to purchase, severally
and not jointly, the amount of the U.S. Option Securities set forth opposite
their name on Schedule III at the same purchase price per share as the U.S.
Underwriters shall pay for the U.S. Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the U.S. Underwritten
Securities by the U.S. Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the U.S. Prospectus upon written or telegraphic notice by the U.S.
Representatives to the Company and the Contributing Stockholders setting forth
the number of shares of the U.S. Option Securities as to which the several U.S.
Underwriters are exercising the option and the settlement date. Delivery of
certificates for the shares of U.S. Option Securities by the Company and the
Contributing Stockholders, and payment therefor to the Company and the
Contributing Stockholders, shall be made as provided in Section 3 hereof. The
maximum number of shares of the U.S. Option Securities to be sold by the Company
and the Contributing Stockholders is set forth in Schedule III hereof. If for
any reason any Contributing Stockholder fails or is unable to sell any portion
of the U.S. Option Securities set forth opposite their name in Schedule III
hereof, the Company agrees to issue and sell to the U.S. Underwriters such
additional number of securities at the same purchase price per share as the U.S.
Underwriters shall pay for the U.S. Underwritten Securities. In the event that
the U.S. Underwriters exercise less than their full over-allotment option, the
number of shares of the U.S. Option Securities to be sold by each party listed
on Schedule III shall be, as nearly as practicable, in the same proportion to
each other as are the number of shares of the U.S. Option Securities listed
opposite their respective names on said Schedule III. The number of shares of
the U.S. Option Securities to be purchased by each U.S. Underwriter shall be the
same percentage of the total number of shares of the U.S. Option Securities to
be purchased by the several U.S. Underwriters as such U.S. Underwriter is
purchasing of the U.S. Underwritten Securities, subject to such adjustments as
you in your absolute discretion shall make to eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the U.S.
Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on _______________, 1998, or at such time on such later date not more than
three Business Days after the foregoing date as the U.S. Representatives and
14
the International Representatives shall designate, which date and time may be
postponed by agreement among the U.S. Representatives, the International
Representatives, the Company and the Selling Stockholders, or as provided in
Section 9 hereof (such date and time of delivery and payment for the U.S.
Securities being herein called the "Closing Date"). Delivery of the U.S.
Securities shall be made to the U.S. Representatives for the respective accounts
of the several U.S. Underwriters against payment by the several U.S.
Underwriters through the U.S. Representatives of the respective aggregate
purchase prices of the U.S. Securities being sold by the Company and each of the
Selling Stockholders to or upon the order of the Company and the Selling
Stockholders by wire transfer payable in same-day funds to two separate accounts
specified by the Company and one separate account specified by the Selling
Stockholders. Delivery of the U.S. Underwritten Securities and the U.S. Option
Securities shall be made through the facilities of The Depository Trust Company
unless the U.S. Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several U.S. Underwriters of the U.S.
Securities to be purchased by them from such Selling Stockholder and the
respective U.S. Underwriters will pay any additional stock transfer taxes
involved in further transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Contributing Stockholders
and the Company, if applicable, will deliver the U.S. Option Securities (at the
expense of the Company) to the U.S. Representatives, at 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, xx the date specified by the U.S. Representatives (which
shall be within three Business Days after exercise of said option) and
certificates for the U.S. Option Securities in such names and denominations as
the U.S. Representatives shall have requested for the respective accounts of the
several U.S. Underwriters, against payment by the several U.S. Underwriters
through the U.S. Representatives of the purchase price thereof to or upon the
order of the Contributing Stockholders and the Company, if applicable, by wire
transfer payable in same-day funds to one account specified by the Contributing
Stockholders and one account specified by the Company, if applicable. If
settlement for the U.S. Option Securities occurs after the Closing Date, the
Company and the Contributing Stockholders will deliver to the U.S.
Representatives on the settlement date for the U.S. Option Securities, and the
obligation of the U.S. Underwriters to purchase the U.S. Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement, and that the settlement date, if any, shall occur simultaneously with
the "settlement date" under the International Underwriting Agreement.
15
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the U.S. Prospectus.
5. AGREEMENTS.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereto, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectuses or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for your
review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectuses is otherwise required
under Rule 424(b), the Company will cause the Prospectuses, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the U.S.
Representatives of such timely filing. The Company will promptly advise
the U.S. Representatives (A) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (B) when the
Prospectuses, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(C) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectuses or of any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which either of the Prospectuses as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement either of the
Prospectuses to comply with the Act or the rules thereunder, the Company
promptly will (i) prepare
16
and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance and
(ii) supply any supplemented Prospectuses to you in such quantities as you
may reasonably request.
(iii) As soon as practicable, the Company will make
generally available to its security holders and to the U.S. Representatives
an earnings statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(iv) The Company will furnish to the U.S.
Representatives and counsel for the U.S. Underwriters, without charge,
signed copies of the Registration Statement (including exhibits thereto)
and to each other U.S. Underwriter and each Selling Stockholder a copy of
the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an U.S. Underwriter or dealer may be required
by the Act or otherwise required, as many copies of each U.S. Preliminary
Prospectus and the U.S. Prospectus and any supplement thereto as the U.S.
Representatives may reasonably request. The Company will pay the expenses
of printing or other production of all documents relating to the offering.
(v) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the U.S. Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of the
U.S. Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the offering.
(vi) The Company will not, for a period of 270 days
following the Execution Time, without the prior written consent of Salomon
Brothers Inc and the U.S. Representatives, offer, sell or contract to sell,
or otherwise dispose of (or enter into any transaction which is designed
to, or could be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other shares of Common Stock
or any securities convertible into, or exchangeable for, shares of Common
Stock; PROVIDED, HOWEVER, that the Company may issue and sell Common Stock
pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the Execution Time
and the Company may issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution Time.
(vii) For a period of 270 days following the Execution
Time, the Company will not, without the prior written consent of Xxxxx
Xxxxxx Inc. and the U.S. Representatives, release or waive any of the
obligations of its stockholders pursuant to
17
any agreements between the Company and its stockholders which restrict the
transfer, encumbrance, offer or disposal of the Company's securities.
(b) Each U.S. Underwriter agrees that (i) it is not purchasing
any of the U.S. Securities for the account of anyone other than a United States
or Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any of the U.S. Securities or distribute any U.S.
Prospectus to any person outside the United States or Canada, or to anyone other
than a United States or Canadian Person, and (iii) any dealer to whom it may
sell any of the U.S. Securities will represent that it is not purchasing for the
account of anyone other than a United States or Canadian Person and agree that
it will not offer or resell, directly or indirectly, any of the U.S. Securities
outside the United States or Canada, or to anyone other than a United States or
Canadian Person or to any other dealer who does not so represent and agree;
PROVIDED, HOWEVER, that the foregoing shall not restrict (A) purchases and sales
between the International Underwriters on the one hand and the U.S. Underwriters
on the other hand pursuant to the Agreement Between U.S. Underwriters and
International Underwriters, (B) stabilization transactions contemplated under
the Agreement Between U.S. Underwriters and International Underwriters,
conducted through Xxxxx Xxxxxx Inc. (or through the U.S. Representatives and
International Representatives) as part of the distribution of the Securities,
and (C) sales to or through (or distributions of U.S. Prospectuses or U.S.
Preliminary Prospectuses to) United States or Canadian Persons who are
investment advisors, or who otherwise exercise investment discretion, and who
are purchasing for the account of anyone other than a United States or Canadian
Person.
(c) The agreements of the U.S. Underwriters set forth in
paragraph (b) of this Section 5 shall terminate upon the earlier of the
following events:
(i) a mutual agreement of the U.S. Representatives and
the International Representatives to terminate the selling restrictions set
forth in paragraph (b) of this Section 5 and in Section 5(b) of the
International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the
Closing Date, unless (A) the Representatives shall have given notice to the
Company that the distribution of the International Securities by the
International Underwriters has not yet been completed, or (B) the
Representatives shall have given notice to the Company that the
distribution of the U.S. Securities by the U.S. Underwriters has not yet
been completed. If such notice by the Representatives or the International
Representatives is given, the agreements set forth in such paragraph
(b) shall survive until the earlier of (1) the event referred to in
clause (i) of this subsection (c) or (2) the expiration of an additional
period of 30 days from the date of any such notice.
(d) Unless otherwise agreed to by the Representatives, each
Selling Stockholder agrees that, until such date which is 270 days after the
Closing Date, without the prior written consent of Salomon Brothers Inc and the
U.S. Representatives, such Selling Stockholder will not, directly or indirectly,
offer, sell, contract to sell, grant any option or warrant
18
for the sale of, register, loan, pledge, grant any rights with respect to, or
otherwise transfer or dispose of any shares of capital stock of the Company or
securities convertible into or exchangeable or exercisable for, or any rights to
purchase or acquire, such shares of capital stock, including, without
limitation, Common Stock which now or hereafter may be deemed to be beneficially
owned by such Selling Stockholder, subject to certain exceptions provided
therein. It is understood that as joint book-running managers Salomon Brothers
Inc and Xxxxx Xxxxxx Inc., on the one hand, and Credit Suisse First Boston
Corporation, on the other hand, have agreed not to release any Selling
Stockholder from any restriction on transactions relating to the Company's
securities without the written consent of the other. Each Selling Stockholder
also agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the securities held by such
Selling Stockholder except in compliance with this restriction.
6. CONDITIONS TO THE OBLIGATIONS OF THE U.S. UNDERWRITERS. The
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the U.S. Option Securities, as the case may be, shall be subject
to the accuracy of the representations and warranties on the part of the
Company, EKI and Selling Stockholders contained herein as of the Execution Time,
the Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company, EKI and the Selling Stockholders made
in any certificates pursuant to the provisions hereof, to the performance by the
Company, EKI and the Selling Stockholders of their respective obligations to be
performed at or before the Closing Date and to the following additional
conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the U.S. Representatives and the International
Representatives agree in writing to a later time, the Registration Statement
will become effective not later than (i) 6:00 PM New York City time on the date
of determination of the public offering price, if such determination occurred at
or prior to 3:00 PM New York City time on such date or (ii) 9:30 AM on the
Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City time on
such date; if filing of either of the Prospectuses, or any supplement thereto,
is required pursuant to Rule 424(b), the Prospectuses, and any such supplement,
will be filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the U.S. Representatives
and the Selling Stockholders the opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel
for the Company, dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
Delaware, with full corporate power and authority to own its properties and
conduct its business as described in the Prospectuses, is duly qualified to
do business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification, except in
19
jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect, and to the knowledge of such counsel after due
inquiry, the Company has no subsidiaries;
(ii) The Company's authorized equity capitalization is
as set forth in the Prospectuses; the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Prospectuses; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholders) have been duly
and validly authorized and issued and are fully paid and nonassessable; the
certificates for the Securities are in valid and sufficient form; and to
the knowledge of such counsel after due inquiry, the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities, except which rights have been
validly and legally satisfied or waived; and, except as set forth in the
Prospectuses, to the knowledge of such counsel after due inquiry, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange
any securities for, shares of capital stock of or ownership interests in
the Company are outstanding, except for any of the foregoing which have
expired or terminated or which are otherwise no longer outstanding or those
set forth in the Registration Statement;
(iii) Upon delivery of the shares of Common Stock of the
Company pursuant to this Agreement and payment therefor as contemplated
herein, the Underwriters will acquire good and marketable title to such
shares of Common Stock free and clear of any lien, claim, security
interest, or other encumbrance, restriction on transfer or other defect in
title;
(iv) To the knowledge of such counsel following due
inquiry but without search of court or agency records, there is no pending
or threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectuses, and there
is no franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectuses, or to be filed as
an exhibit thereto, which is not described or filed as required; the
descriptions contained in the Prospectuses under the heading "Certain
United States Federal Income Tax Considerations" constitute fair summaries
of those statutes and regulations discussed therein applicable to the
offering of the U.S. Securities; and the statements in the Prospectuses
under the heading "Shares Eligible for Future Sale" fairly summarize the
matters therein described;
(v) The Registration Statement has become effective
under the Act; any required filing of the Prospectuses, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that
20
purpose have been instituted or threatened, and the Registration Statement
and each of the Prospectuses (other than the financial statements and other
financial information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder; and the
descriptions in the Registration Statement and the Prospectuses of
statutes, legal and governmental proceedings and contracts and other
documents are accurate and fairly present the information required to be
shown; provided however, that such counsel may exclude descriptions of
statutes and legal and governmental proceedings set forth in the
Intellectual Property Portion (as defined in Section 6(c)(iv) below) and
the Regulatory Portion (as defined in Section 6(d)(i) below) of the
Registration Statement and Prospectuses, and under the headings "Risk
Factors--Environmental Perception of EarthShell Products" and
"Business--The EarthShell Solution--Environmental Impact" of the
Registration Statement and Prospectuses);
(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(viii) No consent, approval, authorization, filing with
or order of any court or governmental agency or body is required on behalf
of the Company in connection with the sale of the U.S. Securities as
contemplated herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any jurisdiction and the
securities laws of any jurisdiction outside the United States in connection
with the purchase and distribution of the Securities by the U.S.
Underwriters in the manner contemplated in this Agreement and in the
Prospectuses;
(ix) Neither the issue and sale of the Securities, nor
the fulfillment of the terms hereof will conflict with, result in a breach
or violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, (i) the charter or by-laws
of the Company or (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company is a
party or bound or to which its property is subject which is listed as an
exhibit to the Registration Statement or described in the Prospectuses, or
(iii) any statute, law, rule or regulation, or any judgment, order or
decree applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its properties, except for
any violation, breach or imposition which would not have a Material Adverse
Effect;
21
(x) To the knowledge of such counsel after due
inquiry, no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement except for
such rights as are specified in (a) the Registration Rights Agreement dated
February 28, 1995, (b) the Registration Rights Agreement dated September
16, 1993, (c) the Agreement between EKI and Xxxxx Argyropolous dated
October 13, 1992, and (d) the Registration Rights Agreements between the
Company, Eva Ein, Xxxxx Xxxxxxx and Xxxxx XxXxxxxx dated April 23, 1993, in
each of cases (a) through (d), which rights have been legally and validly
satisfied or waived; and
(xi) To such counsel's knowledge after due inquiry,
there are no contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or Prospectuses that are not filed
or described as required.
In addition, such opinion shall state that such counsel has participated in the
preparation of the Registration Statement and Prospectuses as counsel to the
Company. Such participation included conferences with officers of the Company
and the Company's independent accountants, but did not include verification by
such counsel of the facts stated in the Registration Statement and the
Prospectuses and, therefore, would not necessarily reveal any material
misstatements of fact or omission to state a material fact. On the basis of
such participation, nothing has come to such counsel's attention which causes
such counsel to believe that either the Registration Statement or the
Prospectuses (except for the financial statements and other financial
information contained therein as to which such counsel expresses no opinion) as
of their respective dates and as of the Closing Date contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the States of Delaware
(limited to the Delaware General Corporation Law only), and California or the
Federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the U.S.
Underwriters and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
Reference to the Prospectuses in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Company shall have furnished to the U.S. Representatives
and the Selling Stockholders the opinion of Xxxxxxx, Xxxxxxxx & Xxxxxx, patent
counsel for the Company, dated the Closing Date, to the effect that:
(i) EKI is listed on the records of the United States
Patent and Trademark Office as the sole holder of record of each of the
patents listed under the heading "U.S. Patents Held by the Company" on
Schedule IV attached hereto (the "U.S.
22
Patents") and each of the patent applications listed under the heading
"U.S. Patent Applications Submitted by the Company" on Schedule V attached
hereto (the "U.S. Applications"). Such counsel knows of no claims of third
parties to any ownership interest or lien with respect to any of the U.S.
Patents or U.S. Applications that would conflict with the Company's License
Rights under the Amended and Restated License Agreement.
(ii) EKI is listed in the records of the appropriate
foreign office as the sole holder of record of each of the foreign patents
listed under the heading "Non-U.S. Patents Held by the Company" on Schedule
VI hereof (the "Non-U.S. Patents") (collectively, the U.S. Patents and
Non-U.S. Patents are referred to herein as the "Patents") and each of the
foreign patent applications listed under the heading "Non-U.S. Patent
Applications Submitted by the Company" on Schedule VII attached hereto (the
"Non-U.S. Applications") (collectively, the U.S. Applications and the
Non-U.S. Applications are referred to herein as the "Applications"). Such
counsel knows of no claims of third parties to any of the Non-U.S. Patents
or Non-U.S. Applications that would conflict with the Company's License
Rights under the Amended and Restated License Agreement.
(iii) Pursuant to the Amended and Restated License
Agreement, ECC's License Rights apply with respect to all of the U.S.
Patents, Non-U.S. Patents, U.S. Applications and Non-U.S. Applications
listed in Schedules IV, V, VI and VII. To the best of such counsel's
knowledge, no other person or entity has obtained any rights from EKI that
would diminish the exclusive rights the Company obtained under the Amended
and Restated License Agreement.
(iv) Such counsel has reviewed the statements under the
Registration Statement/Prospectuses captions "Risk Factors--Protection of
Proprietary Technology," "Business--The Technology," and "Business--
Patents, Proprietary Rights and Trademarks" (collectively, the
"Intellectual Property Portion") of the Registration Statement and the
Prospectuses. Insofar as such statements constitute a summary of EKI's
Patents and Applications and the Company's License Rights, and matters
related thereto, such counsel believes them to fairly, accurately and
completely summarize the legal matters, documents and proceedings relating
to such Patents and Applications and license rights described therein.
Nothing has come to the attention of such counsel which causes it to
believe that the information in the Intellectual Property Portion contains
any untrue statement of a material fact or omits to state a material fact
which is required to be stated therein or necessary to make the statements
therein not misleading.
(v) Such counsel has no knowledge of any facts that
(i) would preclude the Company from having clear, exclusive rights to the
patents and Applications as granted by the Amended and Restated License
Agreement; (ii) would lead such counsel to conclude that any of the Patents
are invalid or unenforceable; or (iii) that any patent that may ultimately
issue from one or more of the Applications would be invalid or
23
unenforceable. Such counsel has no knowledge of any facts that cause it to
believe that the Company lacks any rights to use all intellectual property
necessary to conduct its business as now or proposed to be conducted or as
described in the Registration Statement or the Prospectuses. Such counsel
has knowledge of no facts that would preclude the Company from using the
Patents against third parties to prevent such third parties from engaging
in infringing conduct.
(vi) Such counsel has been advised by the Company of
certain specifications for compositions and processes for use in making
foamed starch based food containers and more specifically for a container
for the XxXxxxxx'x Quarter Pounder with Cheese and a container for the
XxXxxxxx'x Big Mac (such specifications are attached hereto as Schedule
VIII). Such counsel is not aware of any patent owned by a party other than
EKI that would be infringed by making food containers using the Schedule
VIII specifications. Such counsel has also been advised of pre-commercial
specifications for compositions and processes for use in making cellulose
ether based inorganically filled sheets which might be useable in making
food and drink containers. Such counsel is not aware of any patent owned
by a party other than EKI that would be infringed by making food containers
using specifications for compositions and processes for use in making
cellulose ether based inorganically filled sheets.
(vii) Such counsel is not aware of any material defect
of form in the preparation or filing of the Applications on behalf of EKI.
To such counsel's knowledge none of the Applications (excepting specific
claims therein) has been finally rejected by the examining agency.
(viii) To the best of such counsel's knowledge, the
Company has complied with the United States Patent and Trademark Office
duty of candor and disclosure during the prosecution leading to the
issuance of each of the U.S. Patents.
(ix) The Amended and Restated License Agreement has
been duly authorized, executed and delivered and is a legal, valid and
binding agreement, enforceable against EKI in accordance with its terms;
(x) Such counsel knows of no pending or threatened
action, suit, proceeding or claim by governmental authorities or others
that the Company is infringing or otherwise violating any patents or trade
secrets.
(xi) Such counsel is not aware of any pending or
threatened actions, suits, proceedings or claim by governmental authorities
or others challenging the validity or scope of the Patents.
(xii) Such counsel is not aware of any infringement on
the part of any third party of any patent or trade secret in violation of
rights held by the Company.
24
(d) The Company shall have furnished to the U.S. Representatives
and the Selling Stockholders the opinion of Xxxxxx, Xxxxx & Xxxxx, P.C., special
regulatory counsel for the Company, dated the Closing Date, to the effect that:
(i) The statements under the captions "Risk
Factors--FDA Regulation," and "Business--Government Regulation"
(collectively, the "Regulatory Portion") in the Registration Statement and
the Prospectuses and any amendment or supplement thereto, to the extent
that they reflect matters of law, summaries of law or regulations, or
regulatory status of the Company, are correct and complete in all material
respects, subject to the qualifications set forth therein.
(ii) Each of the components of the Company's Big Mac
sandwich container ("Big Mac Container") is either approved by the Food and
Drug Administration (the "FDA") as an indirect food additive for its
intended use, is codified in the regulations of the FDA as "generally
recognized as safe" ("GRAS"), or is regarded by the Company and its
consultants (including such counsel) as GRAS for its intended use. Sale of
products manufactured using the formulation of Ali-ite used in
manufacturing the prototype Big Mac Container does not violate the laws and
regulations of the FDA.
(iii) Nothing has come to the attention of such counsel
which causes such counsel to believe that the information contained in (a)
the Registration Statement, or any amendments thereof contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectuses, or any
amendments thereof, contained or contains an untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Company shall have furnished to the U.S.
Representatives and the Selling Stockholders the opinion of Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP, environmental counsel for the Company, dated the
Closing Date, to the effect that: nothing has come to the attention of such
counsel which causes such counsel to believe that the information contained
in (a) the Registration Statement, or any amendments thereof contained or
contains an untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectuses, or any amendments
thereof, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(f) The Selling Stockholders shall have furnished to the U.S.
Representatives the opinion of Milbank, Tweed, Xxxxxx & XxXxxx, counsel for the
Selling Stockholders, dated the Closing Date, to the effect that:
25
(i) Each Selling Stockholder is the record owner of
the Securities to be sold by such Selling Stockholder pursuant to this
Agreement or the International Underwriting Agreement; and
(ii) Upon payment for and delivery of the Securities in
accordance with the terms of this Agreement and the International
Underwriting Agreement, and assuming the Underwriters are acquiring the
Securities purchased by them in good faith without notice of any adverse
claim (as defined in Section 8102(a)(1) of the California Uniform
Commercial Code), the Underwriters will be the owners of the Securities
purchased by them, free and clear of any adverse claim.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the States of Delaware, New
York or California or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the U.S. Underwriters, and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Selling
Stockholders and the Contributing Stockholders and public officials.
(g) The U.S. Representatives shall have received from Xxxxxx &
Xxxxxxx, counsel for the U.S. Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the U.S. Securities, the
Registration Statement, the Prospectuses (together with any supplement thereto)
and other related matters as the U.S. Representatives may reasonably require,
and the Company and each Selling Stockholder shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(h) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board, the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectuses, any supplements to the
Prospectuses and this Agreement and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing Date and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, threatened; and
26
(iii) since the date of the most recent financial
statements included in the Prospectuses (exclusive of any supplement
thereto), there has been no Material Adverse Effect.
(i) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by the Chairman of the Board, the
President and the principal financial or accounting officer of such Selling
Stockholder or by or on behalf of such Selling Stockholder, individually, dated
the Closing Date, to the effect that the representations and warranties of such
Selling Stockholder in this Agreement and in the Custody Agreement and Power of
Attorney are true and correct in all material respects on and as of the Closing
Date to the same effect as if made on the Closing Date.
(j) At the Execution Time and at the Closing Date, Deloitte &
Touche LLP shall have furnished to the U.S. Representatives and the Selling
Stockholders letters, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the U.S.
Representatives, confirming that they are independent accountants within the
meaning of the Act and the applicable published rules and regulations
thereunder and that they have performed a review of the financial information
of the Company contained in the Registration Statement and Prospectuses in
accordance with Statement on Accounting Standards No. 71 and stating in
effect that:
(i) in their opinion the audited financial statements
and financial statement schedules and pro forma financial statements
included in the Registration Statement and the Prospectuses and reported on
by them comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company; their limited review,
in accordance with standards established under Statement on Auditing
Standards No. 71 of the unaudited interim financial information, if any,
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and the Executive, Compensation, Audit, Conflicts
and Stock Option committees of the Company; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to transactions and events subsequent
to December 31, 1997, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements, if any,
included in the Registration Statement and the Prospectuses do not
comply in form in all material respects with applicable accounting
requirements of the Act and with the published rules and regulations
of the Commission with respect to registration statements on Form S-1;
and said unaudited financial statements are not in
27
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectuses;
(2) with respect to the period subsequent to
December 31, 1997, there were any changes in the long-term debt of the
Company or capital stock of the Company or decreases in the
stockholders' equity of the Company as compared with the amounts shown
on December 31, 1997, consolidated balance sheet included in the
Registration Statement and the Prospectuses, or for the period
subsequent to December 31, 1997 there were any decreases, as compared
with the corresponding period in the preceding year in net revenues or
income before income taxes or in total or per share amounts of net
income of the Company, except in all instances for changes or
decreases set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the significance
thereof unless said explanation is not deemed necessary by the U.S.
Representatives; or
(3) the information included in the Registration
Statement and Prospectuses in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary Financial
Information), Item 402 (Executive Compensation) and Item 503(d) (Ratio
of Earnings to Fixed Charges) is not in conformity with the applicable
disclosure requirements of Regulation S-K.
(iii) they have performed certain other specified
procedures as a result of which they determined that certain information of
an accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the general
accounting records of the Company and its subsidiaries) set forth in the
Registration Statement and the Prospectuses, including the information set
forth under the captions "Selected Financial Data" and "Experts" in the
Prospectuses, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
(iv) on the basis of a reading of the unaudited pro
forma financial statements included in the Registration Statement and the
Prospectuses (the "pro forma financial statements"); carrying out certain
specified procedures; inquiries of certain officials of the Company who
have responsibility for financial and accounting matters; and proving the
arithmetic accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro forma financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
28
References to the Prospectuses in this paragraph (j) include any
supplement thereto at the date of the letter.
(k) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (j) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company, taken
as a whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses (exclusive
of any supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the U.S. Representatives,
so material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the U.S. Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the Prospectuses
(exclusive of any supplement thereto).
(l) On or prior to the Execution Time, the National Association
of Securities Dealers shall have approved the Underwriters' participation in the
distribution of the Securities to be sold by the Selling Stockholders.
(m) At the Execution Time, unless otherwise agreed to in writing
by the Representatives, the Company shall have furnished to the Representatives
a letter substantially in the form of Exhibit A hereto from each officer and
director of the Company and stockholders addressed to the Representatives, in
which each such person agreed that, until such date which is (a) 270 days after
the Closing Date if such person is a Selling Stockholder or (b) 180 days after
the Closing Date if such person is not a Selling Stockholder, without the prior
written consent of Salomon Brothers Inc, such person will not, directly or
indirectly, offer, sell, contract to sell, grant any option or warrant for the
sale of, register, loan, pledge, grant any rights with respect to, or otherwise
transfer or dispose of any shares of capital stock of the Company or securities
convertible into or exchangeable or exercisable for, or any rights to purchase
or acquire, such shares of capital stock, including, without limitation, Common
Stock which now or hereafter may be deemed to be beneficially owned by such
person, subject to certain exceptions set forth therein. It is understood that
as joint book-running managers Salomon Brothers Inc and Xxxxx Xxxxxx Inc., on
the one hand, and Credit Suisse First Boston Corporation, on the other hand,
have agreed not to release the Company or any stockholders of the Company from
any restriction on transactions relating to the Company's securities without the
written consent of the other.
(n) On or prior to the Execution Time, the Nasdaq National
Market shall have approved the quotation of the Securities on the Nasdaq
National Market.
29
(o) Prior to the Closing Date, the Company shall have furnished
to the U.S. Representatives such further information, certificates and documents
as the U.S. Representatives may reasonably request.
(p) The closing of the purchase of the International
Underwritten Securities to be issued and sold by the Company pursuant to the
International Underwriting Agreement shall occur concurrently with the closing
described herein.
(q) The Company shall have caused the conversion for all Selling
Stockholders of the shares of Series A Cumulative Senior Convertible Preferred
Stock of the Company into shares of Common Stock.
(r) The Company shall have caused the recapitalization and stock
split to become effective in which each share of Common Stock will be converted
into 262 shares of Common Stock.
(s) The Company shall have caused the Company's Certificate of
Incorporation and by-laws to be amended to, among other things, change the
Company's name to EarthShell Corporation from EarthShell Container Corporation.
(t) The Company shall have arranged for proceeds from the sale
of Common Stock contemplated hereunder to be paid to Imperial Bank in
satisfaction of all amounts owing under the Company's Credit Facility and for
termination of such Credit Facility in connection therewith.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxxx & Xxxxxxx, counsel for the U.S. Underwriters,
at 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, on the
Closing Date.
7. REIMBURSEMENT OF U.S. UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the U.S. Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company or any Selling
Stockholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the U.S. Underwriters, the Company
will reimburse the U.S. Underwriters severally through Xxxxx Xxxxxx Inc. on
demand for all out-
30
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the proposed purchase and
sale of the U.S. Securities. If the Company is required to make any payments to
the U.S. Underwriters under this Section 7 because of any Selling Stockholder's
refusal, inability or failure to satisfy any condition to the obligations of the
U.S. Underwriters set forth in Section 6, such Selling Stockholders shall,
together with any other Selling Stockholders so refusing, unable or failing to
satisfy such conditions, on a pro rata basis, reimburse the Company on demand
for all amounts so paid.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and EKI jointly and severally agree to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls any Underwriter within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any U.S. or
International Preliminary Prospectus or in either of the Prospectuses, or in any
amendment thereof or supplement thereto, or arise out of or are based upon 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, and
agrees to reimburse each such indemnified party, as incurred, 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 Company and EKI will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any U.S. Underwriter
through the U.S. Representatives specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company and
EKI may otherwise have.
(b) Each Selling Stockholder severally agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls the Company or any
Underwriter within the meaning of either the Act or the Exchange Act, each other
Selling Stockholder to the same extent as the foregoing indemnity from the
Company and EKI to each Underwriter, but only with reference to written
information furnished to the Company by or on behalf of such Selling Stockholder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Selling Stockholder may otherwise have. Notwithstanding anything to the
contrary in this Agreement, the aggregate liability any Selling Stockholder
shall have to all U.S. Underwriters and other persons and entities pursuant to
this Agreement (whether pursuant to Section 1(b), 8(b), 8(e) or otherwise),
shall not exceed an
31
amount equal to the net proceeds (after deducting the Underwriters' discount)
received by such Selling Stockholder from the sale of the Securities pursuant to
this Agreement.
(c) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Stockholder to
the same extent as the foregoing indemnity to each U.S. Underwriter, but only
with reference to written information relating to such U.S. Underwriter
furnished to the Company by or on behalf of such U.S. Underwriter through the
U.S. Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any U.S. Underwriter may otherwise have. The Company and each
Selling Stockholder acknowledge that the statements set forth in the last
paragraph of the cover page regarding delivery of the U.S. Securities, the
stabilization legend in block capital letters on page 2 and, under the heading
"Underwriting," (i) the sentences related to concessions and reallowances and
(ii) the paragraph related to stabilization in the Prospectuses constitute the
only information furnished in writing by or on behalf of the several U.S.
Underwriters for inclusion in the Prospectuses.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a), (b) or (c) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b) or (c) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); PROVIDED, HOWEVER, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An
32
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company, the Selling Stockholders and
the U.S. Underwriters agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company, one or more of the Selling Stockholders and one or more of
the U.S. Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company, by the Selling
Stockholders and by the U.S. Underwriters from the offering of the U.S.
Securities; PROVIDED, HOWEVER, that in no case shall any U.S. Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the U.S. Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such U.S. Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the Selling
Stockholders and the U.S. Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, of the Selling Stockholders and of the U.S. Underwriters
in connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company and by the Selling Stockholders shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses) received by each of
them, and benefits received by the U.S. Underwriters shall be deemed to be equal
to the total underwriting discounts and commissions, in each case as set forth
on the cover page of the U.S. Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company, the Selling
Stockholders or the U.S. Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Selling Stockholders and
the U.S. Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (e), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an U.S. Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an U.S.
Underwriter shall have the same rights to contribution as such U.S. Underwriter,
and each person who controls the Company within the meaning of either the Act or
the Exchange Act, each
33
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (e).
9. DEFAULT BY AN U.S. UNDERWRITER. If any one or more U.S.
Underwriters shall fail to purchase and pay for any of the U.S. Securities
agreed to be purchased by such U.S. Underwriter or U.S. Underwriters hereunder
and such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining U.S. Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of U.S. Securities set forth opposite their names
in Schedule I hereto bears to the aggregate amount of U.S. Securities set forth
opposite the names of all the remaining U.S. Underwriters) the U.S. Securities
which the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase; PROVIDED, HOWEVER, that in the event that the aggregate amount of U.S.
Securities which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of U.S. Securities
set forth in Schedule I hereto, the remaining U.S. Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the U.S. Securities, and if such nondefaulting U.S. Underwriters do not purchase
all the U.S. Securities, this Agreement will terminate without liability to any
nondefaulting U.S. Underwriter, the Selling Stockholders or the Company. In the
event of a default by any U.S. Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the U.S. Representatives shall determine in order that the required
changes in the Registration Statement and the Prospectuses or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting U.S. Underwriter of its liability, if any, to the
Company, the Selling Stockholders and any nondefaulting U.S. Underwriter for
damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the U.S. Representatives, by written notice given to
the Company prior to delivery of and payment for the U.S. Securities, if at any
time prior to such time (i) a banking moratorium shall have been declared either
by Federal or New York State authorities, (ii) trading in securities on the New
York Stock Exchange or the Nasdaq National Market shall have been suspended or
limited or minimum prices shall have been established on such Exchange or
National Market, or (iii) there shall have occurred any outbreak or escalation
of hostilities, declaration by the United States of a national emergency or war
or other calamity or crisis the effect of which on financial markets is such as
to make it, in the sole judgment of the U.S. Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the U.S. Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each of the Selling Stockholders and of the U.S.
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
U.S. Underwriter, any Selling Stockholder or the Company or any of the officers,
34
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the U.S. Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the U.S. Representatives, will be
mailed, delivered or telefaxed to the General Counsel, care of Xxxxx Xxxxxx
Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention:
Manager, Investment Banking, or, if sent to the Company, will be mailed,
delivered or telefaxed to (000) 000-0000 facsimile number and confirmed to it
at 000 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, Attention of the
Legal Department; or if sent to any Selling Stockholder, will be mailed,
delivered or telefaxed to (000) 000-0000 and confirmed to him at 000
Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx, 00000, Attention: Xxxxx X.
Xxxxxx, D. Xxxxx Xxxxxxx, as attorneys in fact, c/o EarthShell Corporation,
with a copy to Milbank, Tweed, Xxxxxx & XxXxxx, telefaxed to (000) 000-0000,
Attention: Xxxxxxx X. Xxxxxxxx, and confirmed to him at 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any
Rule 462(b) Registration Statement became or become effective.
35
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"International Preliminary Prospectus" shall have the meaning set
forth under "U.S. Preliminary Prospectus."
"Preliminary Prospectus" shall have the meaning set forth under "U.S.
Preliminary Prospectus."
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the initial registration statement.
"U.S. Preliminary Prospectus" and the "International Preliminary
Prospectus", respectively, shall mean any preliminary prospectus with respect to
the offering of the U.S. Securities and the International Securities, as the
case may be, referred to in paragraph (i) above and any preliminary prospectus
with respect to the offering of the U.S. Securities and the International
Securities, as the case may be, included in the Registration Statement at the
Effective Date that omits Rule 430A Information; and the U.S. Preliminary
Prospectus and the International Preliminary Prospectus are hereinafter
collectively called the "Preliminary Prospectuses".
36
"United States or Canadian Person" shall mean any person who is a
national or resident of the United States or Canada, any corporation,
partnership, or other entity created or organized in or under the laws of the
United States or Canada or of any political subdivision thereof, or any estate
or trust the income of which is subject to United States or Canadian Federal
income taxation, regardless of its source (other than any non-United States or
non-Canadian branch of any United States or Canadian Person), and shall include
any United States or Canadian branch of a person other than a United States or
Canadian Person. "U.S." or "United States" shall mean the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
37
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several U.S. Underwriters.
Very truly yours,
EarthShell Corporation
By:
---------------------------------------
Chief Executive Officer and President
Selling Stockholders
By:
---------------------------------------
Attorney-in-Fact
E. Khashoggi Industries, LLC
By:
---------------------------------------
Chief Executive Officer and President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxx Xxxxxx Inc.
Credit Suisse First Boston Corporation
By: Xxxxx Xxxxxx Inc.
By:
---------------------------------
Vice President
38
For themselves and the other several U.S.
Underwriters named in Schedule I to the
foregoing Agreement.
Xxxxx Xxxxxx Inc.
By:
---------------------------------
Vice President
39
EXHIBIT A
LOCK-UP AGREEMENT
January __, 1998
Salomon Brothers Inc.
Credit Suisse First Boston
As Representatives of the Several Underwriters,
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the proposed initial public offering (the
"Offering") of the Common Stock, $.01 par value per share (the "Common Stock"),
of EarthShell Corporation, a Delaware corporation (the "Company"), pursuant to
which Salomon Brothers Inc and Credit Suisse First Boston, together with certain
of their affiliated international entities, will serve as representatives (the
"Representatives") of the various underwriters (the "Underwriters").
The undersigned understands that the Underwriters propose to enter
into a U.S. Underwriting Agreement and an International Underwriting Agreement
(the "Underwriting Agreements") with the Company providing for the purchase by
the Underwriters of the Common Stock and that the Underwriters propose to
reoffer the Common Stock in a public offering.
In consideration of the execution of the Underwriting Agreements by
the Representatives, the undersigned agrees that, until such date which is (a)
270 days after the consummation (the "Closing Date") of the Offering if the
undersigned is selling Common Stock in the Offering (including shares, if any,
sold as part of the over-allotment option granted to the Underwriters) or (b)
180 days after the Closing Date of the Offering if the undersigned is not
selling Common Stock in the Offering (including shares, if any, sold as part of
the over-allotment option granted to the Underwriters) (such 270-day or 180-day
period is hereafter referred to as the "Lock-up Period"), without the prior
written consent of Salomon Brothers Inc, the undersigned will not, directly or
indirectly, offer, sell, contract to sell, grant any option or warrant for the
sale of, register, loan, pledge, grant any rights with respect to, or otherwise
transfer or dispose of (collectively, a "Disposition") any shares of capital
stock of the Company or securities convertible into or exchangeable or
exercisable for, or any rights to purchase or acquire, such shares of capital
stock, including, without limitation, Common Stock which now or hereafter may be
deemed to be beneficially owned by the undersigned (collectively, the
"Securities") (beneficial ownership to be determined in accordance with the
rules and regulations of the Securities and Exchange Commission); provided,
however, that the undersigned may transfer
A-1
shares of (i) capital stock to one or more affiliates (including partners of any
partnership) or one or more members of the undersigned's immediate family, or a
trust, the sole beneficiaries of which are members of such individual's
immediate family, provided, that the transferee agrees in writing to be bound by
the terms of this letter agreement, (ii) Series A Cumulative Senior Convertible
Preferred Stock (the "Preferred Stock") to the Company pursuant to the
redemption provisions of the Certificate of Designation of the Preferred Stock
(the "Certificate of Designation"), (iii) Preferred Stock to the Company in
exchange for Common Stock pursuant to the conversion provisions of the
Certificate of Designation and (iv) Common Stock to the Underwriters in the
Offering, including pursuant to the over-allotment option granted to the
Underwriters.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relate to or derives any significant part of its value from
Securities.
The undersigned agrees and consents to the entry of stop transfer
instructions with the transfer agent for the Company's capital stock against any
transfer of shares of capital stock of the Company in contravention of the
restrictions set forth above. The undersigned confirms that it understands that
the Underwriters and the Company will rely upon the representations set forth in
this letter in proceeding with the Offering.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this letter agreement, and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof.
All authority herein conferred or agreed to be conferred shall survive
the death of incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
A-2
If, for any reason, the Closing Date of the Offering does not occur
prior to May 31, 1998, or if the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), this
agreement shall be terminated.
-----------------------------------
Signature
-----------------------------------
Printed Name
Accepted as of the date hereof:
SALOMON BROTHERS INC
CREDIT SUISSE FIRST BOSTON
SALOMON BROTHERS
INTERNATIONAL LIMITED
CREDIT SUISSE FIRST BOSTON
As Representative of the Several Underwriters
By: SALOMON BROTHERS INC
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
A-3
