EARTHSHELL CONTAINER CORPORATION
315,000 Shares of Common Stock
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REGISTRATION RIGHTS AGREEMENT
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Dated as of February 28, 1995
EXHIBIT 10.4
TABLE OF CONTENTS
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Securities Subject to this Agreement . . . . . . . . . . . . . . . . . 2
3. Demand, Piggyback and Shelf Registration Rights . . . . . . . . . . . 2
4. Hold-Back Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . 7
6. Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 13
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. Participation in Underwritten Registrations. . . . . . . . . . . . . . 17
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of February 28, 1995, by and among EarthShell Container
Corporation, a Delaware corporation (the "Company"), and E. Khashoggi
Industries, a California general partnership ("EKI").
This Agreement is being entered into in conjunction with the Technical
Services and Sublease Agreement between the Company and EKI (the "Technical
Services Agreement"). In order to induce EKI to enter into the Technical
Services Agreement, the Company has agreed, among other things, to provide the
registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
COMMON STOCK: The Company's common stock, par value $.01 per share.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, trust, unincorporated
organization, limited liability company or other business entity, or a
government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
PUBLIC OFFERING: See Section 3(b)(i).
REGISTRABLE SECURITIES: The 315,000 shares of Common Stock issued to
EKI by the Company on or prior to the date hereof (whether such shares are held
by EKI or an assignee as of the date hereof), including any Common Stock issued
or issuable with respect to the Registrable Securities by reason of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided that a
security ceases to be a Registrable Security when it is no longer a Restricted
Security.
REGISTRATION EXPENSES: See Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
RESTRICTED SECURITY: Any Registrable Securities upon original issuance
thereof, and with respect to any particular such security, so long as such
security was acquired by the holder thereof other than pursuant to an effective
registration under Section 5 of the Securities Act or pursuant to Rule 144
promulgated under the Securities Act; PROVIDED that a security that has ceased
to be Restricted Security cannot thereafter become a Restricted Security.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter or underwriters on a
firm commitment or best efforts basis for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) REGISTRABLE SECURITIES. The securities entitled to the benefits
of this Agreement are the Registrable Securities.
(b) HOLDERS OF REGISTRABLE SECURITIES. A Person (whether EKI or any
successor or assign) is deemed to be a holder of Registrable Securities whenever
such Person owns Registrable Securities.
3. DEMAND, PIGGYBACK AND SHELF REGISTRATION RIGHTS
(a) DEMAND REGISTRATION.
(i) TIMING OF DEMAND REGISTRATION
At any time after the earlier of (i) September 16 1996 or (ii) the
date one year after the consummation of a public offering of Common Stock
pursuant to an effective Registration Statement under the Securities Act for the
account of the Company
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at an aggregate offering price in excess of $35,000,000 (the "Demand
Registration Period"), the holders of at least 25% of the Registrable Securities
may make a written request (a "Registration Request") that the Company register
under the Securities Act the Registrable Securities that are the subject of such
request (the "Demand Registration"). Promptly after receipt of such request,
which shall specify the number of Registrable Securities to be registered and
the intended method of disposition thereof, the Company shall as expeditiously
as reasonably possible and, in the case of the initial registered public
offering of shares of Common Stock, in no event later than four months after the
date of receipt of the Registration Request ("Registration Request Date"), and,
in the case of all subsequent registrations of shares of Common Stock, in no
event later than three months after the Registration Request Date, prepare and
file with the SEC, a Registration Statement with respect to the Registrable
Securities requested to be included therein. The Company agrees to use
commercially reasonable efforts to cause such Demand Registration to become
effective as expeditiously as reasonably possible and thereafter to keep it
continuously effective for a period of ninety days from the date on which the
SEC declares the Demand Registration effective or such shorter period which will
terminate when all the Registrable Securities covered by the Demand Registration
have been sold pursuant to such Demand Registration.
If the Company has been requested to effect a Demand Registration,
whether or not a Registration Statement with respect thereto has been filed or
has become effective, and furnishes to the holders of Registrable Securities
requesting such registration a copy of a resolution of the Board of Directors of
the Company certified by the Secretary of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company and its stockholders for such Registration Statement (i) to be filed
on or before the date such filing would otherwise be required hereunder, (ii) to
become effective, or (iii) to remain effective as long as such Registration
Statement would otherwise be required to remain effective, the Company shall
have the right, but not more than once with respect to any Demand Registration,
to defer such filing or effectiveness or to suspend such effectiveness for a
period of not more than 90 days; provided that if the effectiveness of a
Registration Statement is suspended pursuant to this provision, the period of
such suspension shall be added to the end of the period that such Registration
Statement would otherwise be required to be effective hereunder so that the
aggregate number of days that such Registration Statement is required to remain
effective hereunder shall remain unchanged.
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(ii) NUMBER OF DEMAND REGISTRATIONS
The Company shall be obligated to prepare, file and cause to become
effective pursuant to Section 3(a)(i) no more than one Registration Statement.
(iii) PARTICIPATION
The Company shall promptly give written notice to all holders of
Registrable Securities upon receipt of a request for a Demand Registration
pursuant to Section 3(a)(i) above. The Company shall include in such Demand
Registration such Registrable Securities for which it has received written
requests to register such securities within 30 days after such written notice
has been given.
(iv) LIMITATIONS
The Demand Registration rights granted in this Section 3(a) are
subject to the following limitations: (i) the Company shall not be obligated to
cause any Registration Statement filed under this Section 3(a) to be declared
effective less than six months after the effective date of the most recent
registration statement filed by the Company (other than the Registration
Statement on Form S-3 filed pursuant to Section 3(c) hereof); (ii) any such
offering shall be pursuant to a firm commitment underwriting; provided, however,
that after the initial public offering of Common Stock registered under the
Securities Act, such restrictions shall not apply to any registration pursuant
to Rule 415 under the Securities Act or any similar rule that may be adopted by
the SEC; and (iii) notwithstanding the delivery of a Registration Request by the
holders of the Registrable Securities, the Company may elect to convert such
registration into a registration pursuant to Section 3(b) hereof by providing
notice to the holders of the Registrable Securities as provided in Section 3(b)
and in such event the provisions of Section 3(b) shall apply to such
registration rather than the provisions of this Section 3(a) and no Demand
Registration right will be deemed to have been exercised under this Section
3(a).
(b) PIGGYBACK REGISTRATION.
(i) TIMING OF PIGGYBACK REGISTRATION. If the Company proposes to
file a registration statement in connection with a public offering for the
account of the Company (a "Public Offering") of its Common Stock (other than in
connection with a Demand Registration and other than a registration statement on
Form S-4 or S-8 or any successor forms or otherwise in connection with any
exchange offer, merger, sale of substantially all assets or other reorganization
or recapitalization of the Company or the issuance of securities in connection
with employee stock options, stock awards or other employee benefit plans), then
the Company shall give written notice of such proposed filing to all holders of
Registrable Securities at least 20 days before the anticipated
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filing date of such registration statement (a "Piggyback Registration
Statement"), which notice shall offer the holders of Registrable Securities the
opportunity to include in such Piggyback Registration Statement all shares of
Registrable Securities held by such holders. Each holder of Registrable
Securities desiring to have its Registrable Securities registered pursuant to
this Section 3(b)(i) shall advise the Company in writing within 10 days after
the date of receipt of the Company's notice (which request shall set forth the
amount of Registrable Securities for which registration is requested). The
Company shall include in any such Piggyback Registration Statement all
Registrable Securities so requested to be included.
Notwithstanding the foregoing, if the managing underwriter or
underwriters of any such proposed Public Offering that is an Underwritten
Offering deliver a letter to the Company and to the holders of Registrable
Securities stating that the total number of shares of Common Stock that the
Company intends to include in such Public Offering (the "Primary Shares") and
that the holders of the Registrable Securities and any other persons or entities
entitled to have shares included in such Public Offering have requested to be
included (the "Secondary Shares") would exceed the number of shares of Common
Stock that could be sold without having an adverse effect on such Public
Offering (the "Allowable Shares," and the difference between the Allowable
Shares and the Primary Shares being hereinafter referred to as the "Allowable
Secondary Shares"), the number of Secondary Shares permitted to be included in
the offering shall be reduced as follows: (a) if the number of Allowable
Secondary Shares exceeds two times the number of Secondary Shares that persons
or entities other than the holders of Registrable Securities have requested to
be included (the "Non-EKI Secondary Shares"), then the number of Secondary
Shares requested to be included on behalf of the holders of the Registrable
Securities (the "EKI Secondary Shares") shall be reduced pro rata (based on the
number of shares of Common Stock that each holder of the Registrable Securities
has requested to be included) so that the total number of Secondary Shares
included in such Piggyback Registration Statement equals the number of Allowable
Secondary Shares and as a result the number of Non-EKI Secondary Shares included
in such Piggyback Registration Statement shall not be reduced, and (b) if the
number of Allowable Secondary Shares is less than two times the number of Non-
EKI-Secondary Shares, then (1) the number of EKI Secondary Shares permitted to
be included (if greater than the number of Non-EKI Secondary Shares) shall be
reduced pro rata (based on the number of shares of Common Stock that each holder
thereof has requested to be included) until the number of EKI Secondary Shares
and Non-EKI Secondary Shares are equal in number, and (2) thereafter the number
of Secondary Shares included shall be reduced pro rata from all persons or
entities (based on the number of shares of Common Stock that each holder has
requested to be included) until the number of Secondary Shares included equals
the number of Allowable Secondary Shares. In the event that the contemplated
distribution
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does not involve an Underwritten Offering such determination that the inclusion
of such Registrable Securities shall adversely affect the success of the
offering shall be made by the Company in its reasonable discretion.
(ii) NUMBER OF PIGGYBACK REGISTRATIONS. The Company shall be
obligated to provide the opportunity to include Registrable Securities in not
more than two Piggyback Registration Statements pursuant to Section
3(b)(i). Notwithstanding the foregoing, if the amount of securities which the
holders of the Registrable Securities have requested to be registered is reduced
pursuant to Section 3(b)(i), then such Piggyback Registration Statement shall
not count towards the limit of two Piggyback Registration Statements contained
in the preceding sentence.
(iii) DECISION NOT TO FILE PIGGYBACK REGISTRATION STATEMENT. If,
after proposing to file a Piggyback Registration Statement in connection with
a Public Offering, the Company decides not to file the Piggyback Registration
Statement, then the holders of Registrable Securities requesting inclusion of
their shares pursuant to Section 3(b)(i) will not be entitled to have their
Registrable Securities registered at such time.
(c) SHELF REGISTRATION. The Company shall use all commercially
reasonable efforts to cause to be prepared, filed with the SEC and become
effective, as expeditiously as reasonably possible following the date one year
after the consummation of a public offering of Common Stock pursuant to an
effective Registration Statement under the Securities Act for the account of the
Company at an aggregate offering price in excess of $35,000,000, a Registration
Statement on Form S-3 (or any appropriate successor form) with respect to 15,000
Registrable Securities to be transferred by EKI to its employees, consultants,
agents or any other persons providing services to EKI or any affiliate of EKI
(including the Company) upon the exercise of options granted by EKI. The
Company agrees to use all commercially reasonable efforts to keep such
registration statement continuously effective for a period that will terminate
upon the earlier of (i) the date when all of the Registrable Securities covered
by such Registration Statement have been sold pursuant to such Registration
Statement and (ii) the date fifteen years from the date of this Agreement.
Notwithstanding any other provision of this Agreement, there will be no
Underwritten Registration or Offering in connection with the filing of the
Registration Statement covered by this Section 3(c).
During the period that the Company is required to prepare, file and
keep effective a Registration Statement pursuant to this Section 3(c), the
Company shall have the right to postpone such registration or the preparation
and/or filing of any supplement or amendment to any registration statement filed
pursuant to this Section 3(c) or any prospectus included therein for up to
ninety (90) days (the "Stand-Off Period") if, in the
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good faith judgment of the Board of Directors of the Company, (i) such
registration would interfere with any material transaction then being pursued by
the Company or (ii) the offer or sale of the Common Stock pursuant to such
registration would require disclosure of information, the disclosure of which
could reasonably be expected to be materially harmful to the interests of the
Company. Upon notice by the Company to the holders of the Registrable
Securities of the Company's determination to delay registration or the filing of
a supplement or amendment to a registration statement or prospectus hereunder,
each of the holders of the Registrable Securities hereby covenants that it shall
keep the fact of such notice strictly confidential. In addition to the
requirements of the third paragraph of Section 5(p) hereof, each of the holders
of the Registrable Securities hereby further covenants that, upon receipt of
such notice, it shall (i) promptly halt any offer, sale, trading or transfer of
any of the Registrable Securities for the duration of the Stand-Off Period and
(ii) promptly halt any use, publication or distribution of the registration
statement or any prospectus included therein for the duration of the Stand-Off
Period.
4. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES.
Each holder of Registrable Securities whose Registrable Securities are covered
by a Registration Statement filed pursuant to Section 3 hereof agrees, if
requested by the managing underwriters in an Underwritten Offering, not to
effect any sale or other distribution of equity securities of the Company,
including any sale pursuant to Rule 144 under the Securities Act (except as part
of such Underwritten Registration), during the l0-day period prior to, and
during the 120-day period beginning with, the effectiveness of such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriters.
(b) RESTRICTIONS ON SALE OF EQUITY SECURITIES BY THE COMPANY. To the
extent timely requested by the managing underwriters in an Underwritten
Offering, the Company agrees not to effect any offer, sale or other distribution
of its equity securities, including a sale pursuant to Regulation D under the
Securities Act, during the l0-day period prior to, and during the 120-day period
beginning with, the effectiveness of a Registration Statement filed under
Section 3 (except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor forms or otherwise in
connection with any exchange offer, merger, sale of substantially all assets or
other reorganization or recapitalization of the Company or the issuance of
securities in connection with employee stock options, stock awards or other
employee benefit plans).
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5. REGISTRATION PROCEDURES
In connection with the Company's registration obligations pursuant to
Section 3 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable (or, in the
case of the Company's obligations under Section 3(c), within the time period
prescribed in Section 3(c)), a Registration Statement or Registration Statements
on any appropriate form under the Securities Act (which form shall be a Form S-3
(or its successor form) in the event of the Registration Statement covered by
Section 3(c)), which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof and shall include all financial statements required by the SEC to be
filed therewith, cooperate and assist in any filings required to be made with
the NASD, and use its best efforts to cause such Registration Statement to
become effective; provided that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, the Company will furnish to
the holders of the Registrable Securities covered by such Registration Statement
and the underwriters, if any, copies of all such documents proposed to be filed,
which documents will be subject to the reasonable review of such holders and
underwriters, and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which the
holders of a majority of shares of the Registrable Securities covered by such
Registration Statement or the underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period, or such shorter
period that will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus; the Company shall
not be deemed to have used its best efforts to keep a Registration Statement
effective during the applicable period if it voluntarily takes any action that
would result in the selling holders of the Registrable Securities covered
thereby not being able to sell such Registrable Securities during that period
unless such action is required under applicable law, provided that the foregoing
shall not apply
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to actions taken by the Company in good faith and for valid business reasons,
including without limitation the acquisition or divestiture of assets, so long
as the Company promptly thereafter complies with the requirements of Section
5(k), if applicable;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (3) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, (4) if at any time the representations and warranties of the Company
contemplated by paragraph (n) below cease to be true and correct in any material
respect, (5) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue in any material respect or which requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible time;
(e) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an Underwritten
Offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of shares of the Registrable Securities being sold reasonably agree
should be included therein relating to the plan of distribution with respect to
such Registrable Securities, including, without limitation, information with
respect to the principal amount of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the Underwritten Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
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(f) furnish to each selling holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided that
the Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
(i) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
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(k) upon the occurrence of any event contemplated by paragraph (c)(6)
above, prepare a supplement or posteffective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(l) cause all Registrable Securities covered by the Registration
Statement to be listed, to the degree the Common Stock is so listed, on each
securities exchange on which the Common Stock is then listed if requested by the
holders of a majority of shares of such Registrable Securities or the managing
underwriters, if any;
(m) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agents with printed certificates for the Registrable
Securities which are in a form eligible for deposit with The Depository Trust
Company;
(n) enter into such agreements (including an underwriting agreement)
and take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an Underwritten Registration (1) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary Underwritten Offerings; (2) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority of shares of the
Registrable Securities being sold) addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (3) obtain "cold comfort" letters and
updates thereof from the Company's independent certified public accountants
addressed to the selling holders of Registrable Securities and the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in connection with
primary Underwritten Offerings; and (4) deliver such documents and certificates
as may be requested by the holders of a majority of the Registrable Securities
being sold and the managing underwriters, if any, to evidence compliance with
clause (k) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The above shall be
done at
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each closing under such underwriting or similar agreement or as and to the
extent required thereunder;
(o) make available for inspection by a representative of the holders
of a majority of shares of the Registrable Securities, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney or accountant retained by the selling holders or underwriters, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement; provided
that any records, information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required by court or
administrative order; and
(p) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders, earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of any 12-month period (or
90 days, if such period is a fiscal year) (1) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in an
Underwritten Offering, or (2) if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said 12-month periods.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
EKI agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in section 5(k) hereof, EKI (or any
transferee of the Registrable Securities) will forthwith discontinue disposition
of Registrable Securities (including pursuant to the exercise of any option to
purchase Registrable Securities granted by EKI, as provided in Section 3(c))
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(k) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed by the
Company, such holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
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receipt of such notice. In the event the company shall give any such notice,
the time periods regarding the maintenance of the effectiveness of any
Registration Statement filed pursuant to Section 3 hereof shall be extended by
the number of days during the period from and including the date of the giving
of such notice pursuant to section 5(c)(6) hereof to and including the date when
each seller of Registrable Securities covered by such Registration Statement
shall have received the copies of the supplemented or amended prospectus
contemplated by section 5(k) hereof or the Advice.
6. REGISTRATION EXPENSES
(a) DEMAND REGISTRATION OUT-OF-POCKET EXPENSES. In
connection with the exercise of any demand registration rights hereunder, all
out-of-pocket expenses incident to the Company's performance of or compliance
with the provisions of this Agreement, including without limitation all
registration and filing fees, fees and expenses associated with filings required
to be made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may be required by the
rules and regulations of the NASD), fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters or selling shareholders in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities being sold
may designate), printing expenses (including expenses of printing certificates
for the Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses), fees and expenses
incurred in connection with the listing of the Registrable Securities to be
registered on each exchange on which the Common Stock is then listed, and fees
and disbursements of counsel for the Company and one counsel for the sellers of
the Registrable Securities, incremental fees and expenses of the independent
certified public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), and expenses of all marketing and promotional efforts requested by
the underwriters (all such expenses being herein called "Registration
Expenses"), will be borne by the holders of the Registrable Securities pro rata
based on the number of shares of Common Stock held by each such holder and
included in such Registration Statement, regardless of whether the Registration
Statement becomes effective. In no event shall "Registration Expenses" be
deemed to include underwriting discounts or brokerage fees or commissions
relating to the sale of any securities, including any Registrable Securities,
which shall in all events be borne by the seller of such securities.
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(b) PIGGYBACK REGISTRATION OUT-OF-POCKET EXPENSES. In connection
with the exercise of any piggyback registration rights hereunder, all
Registration Expenses will be borne by the Company, except that any incremental
Securities and Exchange Commission registration and filing fees, fees associated
with filings required to be made with the NASD and fees and expenses associated
with listings on any exchange on which the Common Stock is then listed, to the
extent attributable to the inclusion of Registrable Securities in such Piggyback
Registration Statement, shall be borne by the holders of the Registrable
Securities pro rata based on the number of shares of Common Stock held by each
such holder and included in such Piggyback Registration Statement.
(c) SHELF REGISTRATION OUT-OF-POCKET EXPENSES. In connection with
the exercise of any shelf registration rights hereunder, all Registration
Expenses will be borne by the Company.
(d) COMPANY INTERNAL EXPENSES. In connection with the exercise of
any demand, piggyback or shelf registration rights hereunder, the Company will
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties)
and the expense of any annual audit.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each holder of Registrable
Securities, its partners, its officers, directors and employees (and those of
any of its partners) and each Person who controls such holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same arise out of or are based upon any
information relating to such holder furnished in writing to the Company by such
holder expressly for use therein; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any such
preliminary Prospectus included in a Registration Statement if (i) such holder,
being obligated to do so, failed to deliver a copy of the Prospectus prior to or
concurrently with the sale of the Registrable Securities to the person asserting
such loss, claim, damage, liability or expense after the Company
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had furnished such holder with a sufficient number of copies of the same and
(ii) the Prospectus corrected such untrue statement or omission; and provided,
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and the holder of Registrable Securities thereafter
fails to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of the Registrable Securities to the person asserting
such loss, claim, damage, liability or expense after the Company had furnished
such holder with a sufficient number of copies of the same. The Company will
also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the holders of Registrable Securities, if requested.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In
connection with each Registration Statement, each holder of Registrable
Securities will furnish to the Company such information and affidavits as the
Company reasonably requests for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, the Company, its directors, officers and employees and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or Prospectus or preliminary
Prospectus or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission relates
to the holders of the Registrable Securities and is contained in any information
or affidavit so furnished in writing by such holder to the Company specifically
for inclusion in such Registration Statement, Prospectus or preliminary
Prospectus. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any preliminary
Prospectus, Prospectus or Registration Statement, if requested.
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(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (c) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will be required to consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified party and any other
of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) CONTRIBUTION. If for any reason the indemnification provided for
in the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided that no holder of
Registrable Securities shall be required to contribute an amount greater than
the dollar amount of the proceeds received by such holder with respect to the
sale of any securities. No person guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) ADDITIONAL INDEMNIFICATION AND CONTRIBUTION. In the event of an
Underwritten Offering, the Company and each holder of Registrable Securities
participating in a registration will provide such additional indemnification and
contribution as is reasonably required by the underwriters and as is customarily
contained in underwriting agreements.
8. RULE 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of the holders of a majority of the
Registrable Securities, made after September 16, 1998, make publicly available
other information so long as necessary to permit sales pursuant to Rule 144
under the Securities Act) (provided, however, that the Company may request no
more than one filing extension pursuant to Rule 12b-25 under the Exchange Act in
any calendar year), and it will take such further action as the holders of a
majority of the Registrable Securities may reasonably request after September
16, 1998, all to the extent required from time to time to enable the holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such information and requirements.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any of the
Registration Statements are to be sold in an Underwritten Offering, the
investment banker or investment bankers and managing underwriter or underwriters
that will administer the offering will be selected by the Company after
consultation with the holders of the Registrable Securities.
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No Person may participate in any Underwritten Registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 9 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
10. MISCELLANEOUS
(a) REMEDIES. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of holders
of at least a majority of the Registrable Securities.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to EKI, initially at 000 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxx,
Xxxxxxxxxx 00000-0000 Attention: Chairman of the Board & Chief Legal Officer,
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 10(c); and
(ii) if to the Company, initially at 000 Xxxxxxxxx Xxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000 Attention: President, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 10(c), with a copy to, Xxxxxx, Xxxx & Xxxxxxxx, 0000 Xxxxxxx Xxxx
Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when
18
receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities, except that the shelf
registration rights set forth in Section 3(c) shall only be exercisable by EKI
or by a person who has been expressly assigned such rights in writing by EKI.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company hereunder. This
Agreement supersedes all prior agreements and understandings whether written or
oral and all contemporaneous oral agreements and understandings among the
parties with respect to such subject matter.
(j) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and any
other available remedy.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EARTHSHELL CONTAINER CORPORATION
By: ____________________________
Name: __________________________
Title: __________________________
E. KHASHOGGI INDUSTRIES, a California
general partnership
By: E. Khashoggi Holdings, L.P.
its Managing General Partner
By: E. Khashoggi Industries, Inc.
General Partner of
E. Khashoggi Holdings, L.P.
By: _____________________________
Its: ____________________________
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