SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 29, 2006
EARTHSHELL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 333-13287 77-0322379
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1301 York Road, Suite 200, Baltimore, Maryland 21093
(Address of principal executive offices) (Zip code)
(410) 847-9420
Registrant's telephone number, including area code:
Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 29, 2006, EarthShell Corporation (the "Company") entered into
a Letter Agreement (the "Agreement") with Cornell Capital Partners, LP
("Cornell") pursuant to which Cornell has agreed to forbear from exercising
certain rights and remedies under that certain Secured Convertible Debenture,
dated December 30, 2005 (the "Debenture") and that certain Registration Rights
Agreement ("RRA"), of even date with the Debenture (the Agreement, Debenture,
RRA and all other agreements, contacts, instruments or other items delivered in
connection with the Debenture are collectively referred to as the "Transaction
Documents") in exchange for the issuance by the Company to Cornell of 187,500
shares of the Company's common stock, par value $0.001 per share (the "Shares").
The Company has acknowledged in the Agreement that an event of default
under the Debenture (the "Default") had occurred as of June 30, 2006 as a result
of the Registration Statement filed to register the common stock underlying the
Debenture (the "Cornell Shares") not yet being declared effective by the U.S.
Securities and Exchange Commission (the "SEC"). The Company also acknowledged
that Cornell was entitled to liquidated damages equal to one percent (1%) of the
liquidated value of the Debenture for each thirty (30) day period after May 31,
2006. Pursuant to the Agreement, Cornell has agreed to waive the Default,
including all liquidated damages that may have accrued through the date of the
Agreement and during the Forbearance Period (as defined below), in exchange for
the Shares and the Company obtaining the effectiveness by December 31, 2006 of
that certain Registration Statement originally filed with the SEC on February
14, 2006 which contains the Cornell Shares. In the event the Registration
Statement is declared effective prior to November 1, 2006, Cornell shall return
125,000 of the Shares to the Company. In the event the Registration Statement is
declared effective after November 1, 2006 and before December 1, 2006, Cornell
shall return 62,500 of the Shares to the Company. In the event that the
Registration Statement is declared effective after December 1, 2006, Cornell
shall not return any of the Shares.
The Shares shall have piggy-back registration rights and Cornell shall
also have the right to demand the registration of the Shares by providing to the
Company with thirty (30) days prior written notice of such request.
On September 29, 2006, the Company executed a Promissory Note (the "EKI
Note") in the amount of $250,000 with E. Khashoggi Industries, LLC ("EKI"), the
Company's largest stockholder. Pursuant to the Note, EKI made an initial advance
of $150,000 on September 29, 2006. An additional amount of $100,000 will be
funded to the Company within the next 30 days. Interest accrues on the principal
balance of the Note at a 5.13% per annum rate, compounded annually. All accrued
but unpaid interest and outstanding principal under the note is due and payable
on the earliest to occur of the following(i) five days following the date the
Company has received significant net cash proceeds from new financing
transactions, equity contributions, and transactions relating to the sale,
licensing, sublicensing or disposition of assets or the provision of services
(including advance royalty payments, proceeds from the sale of the Company's
common stock and fees for technological services rendered to third parties),
occurring subsequent to the date of the note or, (ii) the date the existing
notes from EKI to EarthShell become due and payable.
On October 2, 2006, the Company executed a Promissory Note (the "RPI
Note") in the amount of $150,000 with ReNewable Products, Inc., a licensee of
EarthShell, or affiliates. Interest accrues on the principal balance of the RPI
Note at a 5.13% per annum rate, compounded annually. All accrued but unpaid
interest and outstanding principal under the note is due and payable on the
earliest to occur of the following: (i) the second anniversary of the date of
this note; (ii) five days following the date the Company has received has
received significant net cash proceeds from any financing transactions, equity
contributions, and transactions relating to the sale, licensing, sublicensing or
disposition of assets or the provision of services (including advance royalty
payments, proceeds from the sale of the Company's common stock and fees for
technological services rendered to third parties), occurring subsequent to the
date of the note.
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Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
See Item 1.01 above.
Item 3.02. Unregistered Sales of Equity Securities.
See Item 1.01 above.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibit No. Description:
Exhibit Description
Exhibit 10.1 Letter Agreement, dated September 29, 2006, by and between
EarthShell Corporation and Cornell Capital Partners, LP
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: October 4, 2006 EARTHSHELL CORPORATION
By: /s/ Scott Houston
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Name: Scott Houston
Title: Chief Financial Officer
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