SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
Form 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period From ____________ to ____________
EARTHSHELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0322379
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6740 Cortona Drive
Santa Barbara, California 93117
(805) 571-8232
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
(title of each class)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No
Indicate by check mark if there is no disclosure of delinquent filers
in response to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of the issuer's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes |X| No
The aggregate market value of common stock held by non-affiliates as of
June 30, 2003 was $42,344,627.
The number of shares outstanding of the Registrant's Common Stock as of
March 31, 2004 was 14,128,966.
1
Documents Incorporated by Reference:
None.
EarthShell Corporation ("EarthShell" or the "Company") hereby amends its Annual
Report on Form 10-K filed on April 14, 2004, to add a new section entitled
"Recent Developments" under Part II, Item 7 entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
information set forth under Part III, as set forth in the pages attached:
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Recent Developments
In late May 2004, the Company's largest debenture holder sent to the
Company a formal notice demanding repayment of its debentures because of the
defaults. The Company continues to be in discussions with its debenture holders
to negotiate a satisfactory solution to the debenture defaults.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of EarthShell
The term of office of each of our Directors will expire at the next annual
meeting.
Name Age Position Director Since
------------------------- --- ------------------------------------------------------ --------------
Essam Khashoggi.......... 64 Chairman of the Board 1992
Simon K. Hodson.......... 49 Vice Chairman of the Board and Chief Executive Officer 1992
John Daoud............... 68 Director 1992
Layla Khashoggi.......... 46 Director 1992
George W. Roland......... 64 Director 2001
Hamlin M. Jennings....... 55 Director 2003
Walker Rast.............. 68 Director 2003
-------------
The following is a biographical summary of the experience of each of the
directors:
Essam Khashoggi has served as Chairman of the Board of the Company
since its organization in November 1992. Mr. Khashoggi has also served as
Chairman of the Management Committee and Chief Executive Officer of E. Khashoggi
Industries, LLC ("EKI") and its predecessor entity, E. Khashoggi Industries,
since their organization in October 1997 and June 1991, respectively. Mr.
Khashoggi has served as a director and officer of a number of domestic and
foreign companies engaged in licensing, manufacturing, real estate, marketing
and design and he has served as a Trustee for the University of California Santa
Barbara Foundation.
Simon K. Hodson has served as Vice Chairman of the Board and Chief
Executive Officer of the Company since its organization in November 1992.
Additionally, Mr. Hodson served as President of the Company from May 1999 until
May 2002, and previously from December 1995 until May 1996. Mr. Hodson has also
served as President and Vice Chairman of EKI and its predecessor entity since
their organization in October 1997 and June 1991, respectively, and as President
and Vice Chairman of Concrete Technology Corporation ("CTC") since August 1987.
Mr. Hodson was President of National Cement & Ceramics Laboratories, Inc., a
company previously engaged in materials science research, from June 1990 through
1995. He is a co-inventor of a number of U.S. and foreign patented inventions,
all belonging to EKI.
2
John Daoud has served as a Director of the Company since its
organization in November 1992. Mr. Daoud served as Secretary of the Company from
October 1996 through December 1999 and as the Assistant Secretary of the Company
from June 1993 until October 1996. Mr. Daoud has also served as the Chief
Financial Officer and Secretary of EKI and its predecessor entity since their
organization in October 1997 and June 1991, respectively, and as the Manager and
Principal Officer of Condas International, LLC and its predecessor from 1987
through October 2003. Since 1972, Mr. Daoud has advised Mr. Khashoggi and his
affiliated entities on certain financial matters both in an individual capacity
as well as Manager and Principal Officer of Condas International, LLC and its
predecessor. From 1970 to 1972, Mr. Daoud was a Senior Auditor with
PricewaterhouseCoopers.
Layla Khashoggi has served as a Director of the Company since its
organization in November 1992. Mrs. Khashoggi has also been a member of the
Management Committee of EKI since its organization in October 1997 and a
Director of CTC for the past five years. Mrs. Khashoggi has served as Chairman
of the Development Committee and as an Executive Committee member of the Board
of Laguna Blanca School, Site Council Member and Co-Chairman of the Budget
Committee of San Marcos High School, Executive Committee member and Chairman of
the Marketing Committee of the Santa Barbara Zoo Board, and member of the Board
of Trustees of the Santa Barbara Public Education Foundation. Mrs. Khashoggi is
Essam Khashoggi's spouse.
George W. Roland has served as a Director of the Company since
September 2001. Dr. Roland is currently a business consultant and is a member of
the Board of Directors, and previously served as President and Chief Executive
Officer from 1995 to 1998, of Astropower, Inc. Solar Power Division. Dr. Roland
served as President and Chief Executive Officer for Siemens Solar Industries,
L.P. from 1993 until 1995. Prior to 1993, Dr. Roland was a consultant to the
President of Applied Superconductors and the Vice President and Division Manager
of Kennametal, Inc., a large technology firm, for over ten years. Dr. Roland
holds over 15 patents and has published over 35 scientific papers.
Hamlin M. Jennings has served as a Director of the Company since
January 1, 2003. Since 1987, Dr. Jennings has been a Professor in the Civil and
Environmental Engineering Department and the Materials Sciences and Engineering
Department at Northwestern University. In 2002, he assumed the Chairmanship of
the Civil and Environmental Engineering Department. Prior to his appointment at
Northwestern, Dr. Jennings worked at the National Institute of Standards and
Technology, Imperial College London, and the University of Cape Town. He is a
fellow of the Institute of Materials in the United Kingdom and Fellow of the
American Ceramic Society. Dr. Jennings received a Ph.D. in materials science
from Brown University in 1975, and a Bachelor of Science in Physics from Tufts
University in 1969. Additionally, Dr. Jennings is owner and President of
Evanston Materials Consulting Corporation, founded in 1997, which specializes in
cement-based materials and coatings. Dr. Jennings holds 12 patents, is the
associate editor of two journals and has published over 120 scientific papers.
Walker Rast has served as a Director of the Company since September
2003, when he was appointed to fill the vacancy created by the resignation of
Mr. Bert Moyer from the Board in August 2003. Mr. Rast is currently a business
consultant and a member of the Educational Foundation Board of the University of
South Carolina and a member of the Advisory Board of the College of Engineering
and Information Technology. From 1987 to 1994, Mr. Rast was a member of the
Executive Board of Directors of Royal Packaging Industries Van Leer, a worldwide
packaging company based in the Netherlands. From 1979 to 1987, Mr. Rast was
President of Keyes Fibre Company (now know as The Chinet Company), first an
operating group of Arcata Corporation and then of Royal Packaging Industries Van
Leer. Mr. Rast held various executive positions with Arcata Corporation for over
ten years, and was previously with U.S. Gypsum Corporation for over ten years.
Executive Officers of EarthShell
Name Age Position Officer Since
------------------------- --- ------------------------------------------------------ -------------
Simon K. Hodson.......... 49 Vice Chairman of the Board and Chief Executive Officer 1992
Vincent J. Truant........ 56 President and Chief Operating Officer 1998
D. Scott Houston......... 49 Chief Financial Officer and Secretary 1993
3
The following is a biographical summary of the experience of Mr. Truant
and Mr. Houston. For a biographical summary of the experience of Mr. Hodson,
kindly refer to the summaries of Directors' experience provided above.
Vincent J. Truant has served as the Company's President and Chief
Operating Officer since May 15, 2002. From March 2001 to May 2002, Mr. Truant
served as Senior Vice President and Chief Marketing Officer. From October 1999
to March 2001, and from March 1999 to October 1999, respectively, he served as
Senior Vice President and as Vice President of Marketing, Environmental Affairs
and Public Relations, and from April 1998 to March 1999 as Vice President of
Marketing and Sales. During a prior 15-year tenure at Sweetheart Cup Company
("Sweetheart"), Mr. Truant most recently served as Vice President and General
Manager for the National Accounts Group and the McDonald's Corporation Strategic
Business Units. Before joining Sweetheart, Mr. Truant was engaged in both
domestic and international marketing assignments for Philip Morris Inc. and its
subsidiary, Miller Brewing Company, as well as Eli Lilly & Company.
D. Scott Houston has served as the Company's Chief Financial Officer
since October 1999, and the Company's Secretary since December 1999. From
January to October 1999, Mr. Houston served as Senior Vice President of
Corporate Planning and Assistant Secretary. From July 1993 until January 1999,
Mr. Houston served as Chief Financial Officer. From August 1986 until joining
the Company, he held various positions with EKI and its affiliates, including
Chief Financial Officer and Vice President of CTC from 1986 to 1990. From 1984
to 1986, Mr. Houston operated Houston & Associates, a consulting firm. From July
1980 until September 1983, Mr. Houston held various positions with the
Management Information Consulting Division of Arthur Andersen & Co., an
international accounting and consulting firm.
Audit Committee Financial Expert
The Audit Committee is presently comprised of Dr. Roland, Dr. Jennings
and Mr. Rast. The members of the audit committee are all independent within the
meaning of the National Association of Securities Dealers' listing standards.
The Board of Directors has determined that Dr. Roland qualifies as the "audit
committee financial expert" as that term is defined in Item 401(h)(2) of
Regulation S-K in the Securities Exchange Act of 1934.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who beneficially own more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC. Officers, directors and greater than
10% beneficial owners are required by the SEC to furnish the Company with copies
of all Forms 3, 4 and 5 that they file.
In light of recent changes in reporting requirements, the Company has
undertaken a review of all available past Section 16(a) filings to ensure proper
disclosure of its officers', directors' and 10% beneficial owners' compliance
with the new reporting requirements. Each of the transactions reported below are
grants of Company stock options with exercise prices greater than the Company's
current stock price. Based solely upon the Company's review of the copies of
such forms it has received, and certain other information available to it, to
the best of the Company's knowledge:
From 1999 through 2003, Mr. Khashoggi did not file in a timely manner
five reports each reporting two stock option grants. These stock option grants
were reported on May 28, 2004.
From 1999 through 2003, Mrs. Khashoggi did not file in a timely manner
five reports each reporting two stock option grants. These stock option grants
were reported on May 28, 2004.
From 2000 through 2003, Mr. Daoud did not file in a timely manner four
reports each reporting one stock option grant. These stock option grants were
reported on May 28, 2004.
4
From 2001 through 2003, Dr. Roland did not file in a timely manner a
Form 3, one report reporting two stock option grants and one report reporting
one stock option grant. These stock option grants as well as the commencement of
Dr. Roland's insider status were reported on May 28, 2004.
In 2002 and 2003, Mr. Moyer did not file in a timely manner a Form 3
and two reports each reporting one stock option grant. These stock option grants
as well as the commencement of Mr. Moyer's insider status were reported on May
28, 2004.
In 2003, Dr. Jennings did not file in a timely manner two reports each
reporting one stock option grant. These stock option grants were reported on May
28, 2004.
In 2003, Mr. Rast did not file in a timely manner a Form 3. The
commencement of Mr. Rast's insider status was reported on June 4, 2004.
From 1999 through 2001, Mr. Houston did not file in a timely manner
three reports each reporting one stock option grant. These stock option grants
were reported on May 28, 2004.
From 1999 through 2001, Mr. Truant did not file in a timely manner
three reports each reporting one stock option grant. These stock option grants
were reported on May 28, 2004.
From 2001 through 2003, Mr. Andersen, former Chief Science Officer of
the Company, did not file in a timely manner a Form 3 and one report reporting
one stock option grant. The Company is working with outside legal counsel to
remedy these filings.
In 2003, Mr. Hawks, Principal Accounting Officer of the Company, did
not file in a timely manner a Form 3 and one report reporting one stock option
grant. This stock option grant as well as the commencement of Mr. Hawks' insider
status was reported on May 28, 2004.
Code of Ethics
The Company has adopted a Code of Ethics that applies to all Directors,
officers and employees, including the chief executive officer, chief financial
officer and principal accounting officer of the Company. The Company has posted
its Code of Ethics on its website at www.earthshell.com. The Company intends to
satisfy the disclosure requirement under Item 10 of Form 8-K regarding an
amendment to, or a waiver from, a provision of its Code of Ethics that applies
to the Company's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions and that relates to an element enumerated in Item 406(b) of Regulation
S-K by posting such information on its website.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to the
compensation of the Named Executive Officers. The Company did not grant any
restricted stock awards or stock appreciation rights or make any long-term
incentive plan payouts during the periods set forth below.
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
Fiscal year ----------------------------------------------- ---------------------
Name and Ended Other Annual Securities Underlying
Principal Position December 31 Salary ($) * Bonus ($) Compensation ($) Options (#)
-------------------------------- ------------- ------------- --------- ---------------- ---------------------
Simon K. Hodson................ 2003 $500,000 $ -- $ 2,250 (1) --
Vice Chairman of the Board 2002 500,000 -- 2,500 (1) --
and Chief Executive Officer 2001 500,000 -- 2,437 (1) --
5
Vincent J. Truant.............. 2003 350,000 -- 3,063 (1) --
President and Chief 2002 321,875 (2) -- 2,844 (1) --
Operating Officer 2001 275,000 278,000 (3) 2,156 (1) 8,333 (4)
D. Scott Houston............... 2003 327,200 (5) -- 2,454 (1) --
Chief Financial Officer 2002 327,200 (5) -- 2,419 (1) --
and Secretary 2001 320,000 139,000 (3) 2,250 (1) 8,333 (4)
Per J. Andersen (6)............ 2003 287,200 (5) -- -- --
Chief Science Officer 2002 287,200 (5) -- -- --
2001 280,000 139,000 (3) -- 8,333 (4)
Amitabha Kumar (7)............. 2003 168,713 -- 5,021 (1) --
Vice President of 2002 165,000 -- 4,950 (1) --
Technology 2001 155,417 -- 4,663 (1) --
----------------------
* The Company provides various perquisites to its executives which, in
accordance with SEC regulations, are not itemized because their value is
less than 10% of the executive's salary.
(1) Reflects payments under the Company's 401(k) plan.
(2) Reflects a mid-year salary adjustment effective May 16, 2002 as a result of
Mr. Truant becoming President of the Company on that date. Mr. Truant's
current salary is $350,000.
(3) On May 9, 2001, the Compensation and Stock Option Committees approved a
bonus in the form of a stock grant of 4,167 shares of Common Stock to Mr.
Truant and 2,083 shares of Common Stock each to Mr. Houston and Dr.
Andersen.
(4) As additional bonus compensation, the Compensation and Stock Option
Committees approved the grant of fully vested incentive stock options to
purchase 8,333 shares of Common Stock to Mr. Truant, Mr. Houston and Dr.
Andersen. The options are for a term of ten years at a strike price of
$44.04. The closing price of the stock on the date of the grants was $44.04
per share and the Company paid the withholding tax on the grants.
(5) Reflects $7,200 in car allowance payments made to Mr. Houston and Dr.
Andersen.
(6) Dr. Andersen is no longer an employee of the Company, effective December
31, 2003.
(7) Prior to 2003, Mr. Kumar was Director of Foam and Paperboard Materials
Research. Mr. Kumar is no longer an employee of the Company. Mr. Kumar
resigned from all positions with the Company in March 2004.
Stock Option Grants in 2003
The following table sets forth information with respect to options to
purchase shares of the Company's Common Stock granted in 2003 to the Named
Executive Officers:
Potential Realizable Value at
Assumed Rates of Stock
Individual Grants Appreciation for Option Term (1)
--------------------------------------------------------- --------------------------------
Number of % of Total
Shares Options
Underlying Granted to
Name and Options Employees Exercise Price Expiration
Principal Position Granted in 2003 (per share) Date 5% 10%
---------------------------- ---------- ----------- -------------- ---------- ------------ ------------
Simon K. Hodson................ 41,667 38% $4.80 9/19/2013 $301,348 $479,846
Vice Chairman of the
Board and Chief
Executive Officer
6
Vincent J. Truant.............. 20,833 19% 4.80 9/19/2013 150,670 239,917
President and Chief
Operating Officer
D. Scott Houston............... 20,833 19% 4.80 9/19/2013 150,670 239,917
Chief Financial Officer
and Secretary
Per J. Andersen................ 20,833 19% 4.80 9/19/2013 150,670 239,917
Chief Science Officer
Amitabha Kumar................. -- -- -- -- -- --
Vice President of
Technology
--------------------
(1) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. In each case, the
Company would use the market price of the Common Stock on the date of grant
to compute the potential realizable values.
7
Aggregated Option Exercises In 2003 and 2003 Year End Option Values
The following table sets forth for the Named Executive Officers
information with respect to options exercised, unexercised options and year-end
option values, in each case with respect to options to purchase shares of the
Company's Common Stock.
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options at
Options at Fiscal Year End Fiscal
2003 Year End 2003 (1)
Shares --------------------------- --------------------------
Name and Acquired on Value
Principal Position Exercise Realized Unexercisable Exercisable Unexercisable Exercisable
------------------------------- ----------- -------- ------------- ----------- ------------- -----------
Simon K. Hodson................ -- -- 83,334 -- -- --
Vice Chairman of the
Board and Chief
Executive Officer
Vincent J. Truant.............. -- -- 50,000 32,917 -- --
President and Chief
Operating Officer
D. Scott Houston............... -- -- 47,500 42,037 -- --
Chief Financial Officer
and Secretary
Per J. Andersen................ -- -- 44,166 8,333 -- --
Chief Science Officer
Amitabha Kumar................. -- -- -- -- -- --
Vice President of
Technology
------------------------
(1) The closing price of the Common Stock on the NASDAQ Market on December 31,
2003 was $1.80.
Compensation of Directors
Under a compensation plan based on a study conducted by SCA Consulting
LLC, the Board pays to each non-employee director an annual retainer fee of
$20,000, payable quarterly, plus a fee of $1,000 for each regular meeting
attended in person. Committee chairpersons receive an additional $1,000 per
year. All of the directors, except for Mr. Hodson, are currently considered to
be non-employee directors of the Company.
The 1995 Stock Incentive Plan, as amended, provides that each
non-employee director automatically be granted options to purchase 2,083 shares
of the Company's Common Stock, effective at the conclusion of each annual
meeting. All such stock options (i) vest ratably at 25% at the end of each
calendar quarter following the grant, provided the director holding the options
continues to serve as a director at the end of each such quarter, and (ii) have
an exercise price equal to the "fair market value" of the underlying shares,
which is defined in the 1995 Stock Incentive Plan as the closing trading price
on the day before such annual meeting.
In April 2004, based on the financial condition of the Company, the
Board of Directors unanimously agreed to defer the payment of the Director fees
discussed above until such time as the financial condition of the Company
improves.
8
Employment Agreements and Arrangements
Simon Hodson currently does not have a written employment agreement
with the Company. His previous employment agreement expired on September 30,
2001. Mr. Hodson receives an annual salary of $500,000, subject to annual review
and increase at the discretion of the Board of Directors. He may also be
entitled to receive (i) an annual bonus, the amount of which is determined by
the Compensation Committee, and (ii) options or other rights to acquire Common
Stock, under terms and conditions determined by the Stock Option Committee. Mr.
Hodson may be terminated at any time with or without cause. In order to conserve
cash until the Company is able to establish its royalty revenue stream, Mr.
Hodson agreed to a 40% reduction in base salary to $300,000 per year effective
April 16, 2004.
D. Scott Houston entered into a written employment agreement with the
Company on October 19, 1993. Mr. Houston receives an annual salary of $320,000,
subject to annual review and increase at the discretion of the Board of
Directors. He may also be entitled to receive (i) an annual bonus, the amount of
which is determined by the Compensation Committee, and (ii) options or other
rights to acquire the Common Stock, under terms and conditions determined by the
Stock Option Committee. Mr. Houston may be terminated at any time, with or
without cause, upon thirty (30) days notice. In order to conserve cash until the
Company is able to establish its royalty revenue stream, Mr. Houston agreed to a
75% reduction in base salary to $80,000 per year effective April 16, 2004, and
is currently working on a part-time basis.
Vincent J. Truant entered into an employment agreement with the Company
with a commencement date of May 1, 1998. The agreement provides for an annual
salary of $225,000 and options to acquire 6,250 shares of the Company's Common
Stock at an exercise price equal to $252.00 per share, which is the price at
which the Company's Common Stock was first sold to the public in the Company's
initial public offering. The Board of Directors increased Mr. Truant's annual
salary to $250,000 on September 29, 1999. The Board of Directors further
increased Mr. Truant's salary to $275,000 effective January 1, 2000. On May 15,
2002, the Board increased Mr. Truant's salary to $350,000 in connection with his
new responsibilities as President and Chief Operating Officer. Mr. Truant may
also be entitled to receive (i) an annual bonus in an amount equal to one year's
base salary, provided certain financial and other milestones determined by Mr.
Truant and the Compensation Committee are met by Mr. Truant and the Company,
and, in the event such milestones are not met, or are significantly exceeded,
such other lesser or greater bonus as the Compensation Committee shall
determine, and (ii) options or other rights to acquire Common Stock, under terms
and conditions determined by the Stock Option Committee. Pursuant to the terms
of his employment agreement, Mr. Truant may be terminated at any time, with or
without cause, upon thirty (30) days written notice, provided that, if the
Company terminates Mr. Truant's employment for other than cause, he will be
entitled to receive a one-time severance payment equal to 100% of his
then-current annual base salary.
Compensation Committee Interlocks and Insider Participation
All decisions relating to executive compensation during 2003 were made
by the Company's Compensation Committee, which was comprised of Mr. Khashoggi,
Mrs. Khashoggi and Mr. Moyer through July 2003 (at which time Mr. Moyer resigned
from the Board), and Mr. Khashoggi, Mrs. Khashoggi and Dr. Roland from July 2003
through December 31, 2003. None of the members were officers of the Company in
2003. Mr. Khashoggi is the controlling stockholder of EKI, the Company's
principal stockholder with whom the Company has certain relationships and
related transactions described below. Mr. Khashoggi is the beneficial owner of
35.91% of the Common Stock of the Company.
The Company has an exclusive, worldwide, royalty-free license to use
and license EKI technology to manufacture and sell disposable, single-use
containers for packaging or serving food and beverages intended for consumption
within a short period of time (less than 24 hours).
On July 29, 2002, the Company entered into an amendment to its Amended
and Restated License Agreement with EKI (the "License Agreement") expanding the
field of use for the EarthShell technology to include noodle bowls used for
packaging instant noodles. Because the noodle bowl development was made at no
cost to EarthShell and is an incremental field of use, EarthShell will pay to
EKI 50% of any royalty or other consideration it receives in connection with the
sale of products within this field of use.
9
In addition, on July 29, 2002 the Company entered into a License &
Information Transfer Agreement with Biotec (the "Biotec Agreement"), a wholly
owned subsidiary of EKI, to utilize Biotec technology for foodservice
applications, including food wraps and cutlery used in foodservice applications.
EKI had previously granted to the Company priority rights to license certain
product applications on an exclusive basis from Biotec in consideration for the
Company's payment of a $100,000 monthly licensing fee to Biotec. In addition, in
consideration of the monthly payment, Biotec agreed to render technical services
to the Company at Biotec's cost plus 5%. The licensing fee and services
arrangements were continued in the Biotec Agreement. Under the terms of the
Biotec Agreement, Biotec is entitled to receive 25% of any royalties or other
consideration that the Company receives in connection with the sale of products
utilizing Biotec technology.
During 2002, and January 2003, EKI made a series of loans to the
Company totaling approximately $5.8 million. These loans were used to pay
operating costs, and accrued interest at 7% or 10% per annum. In connection with
the issuance and sale in March 2003 of the Company's 2% secured convertible
debentures due in 2006 (the "2006 Debentures") to a group of institutional
investors, EKI agreed to subordinate the repayment of these loans to the payment
in full of the Company's obligations under the 2006 Debentures. In addition, EKI
and Biotec agreed to subordinate certain payments to which they were otherwise
entitled under the License Agreement and the Biotec Agreement referenced above
(other than their respective percentages of any royalties received by the
Company) to the satisfaction in full of the Company's obligations under the 2006
Debentures. They further agreed to not assert any claims against the Company for
breaches of the License Agreement or the Biotec Agreement (other than the
assertion of certain equitable remedies to enjoin the Company from, for example,
selling products outside its field of use) until such time as the Company's
obligations under the 2006 Debentures are satisfied in full. EKI and Biotec also
agreed to allow the Company to pledge its interest in the License Agreement to
secure its obligations under the 2006 Debentures, and certain additional
concessions were made by EKI and Biotec to permit the Company greater
flexibility in selling its rights under the License Agreement and the Biotec
Agreement to third parties in an insolvency context. These rights terminate upon
the satisfaction in full of the obligations under the 2006 Debentures. In
consideration for its willingness to subordinate the payments and advances that
are owed to it, the Company issued to EKI in March 2003 an immediately vested
warrant to acquire 83,333 shares of the Company's common stock at a price of
$6.00 per share with a ten year term.
Under the terms of the License Agreement and the Amended and Restated
Patent Agreement for the Allocation of Patent Costs between the Company and EKI,
any patents granted in connection with the EarthShell technology are the
property of EKI, and EKI may obtain a benefit therefrom, including the
utilization and/or licensing of the patents and related technology in a manner
or for uses unrelated to the license granted to the Company in the foodservice
disposables field of use. Effective January 1, 2001, EarthShell assumed direct
responsibility to manage and maintain the patent portfolio underlying the
License Agreement with EKI and to pay directly all related costs.
In connection with the issuance and sale of the 2006 Debentures, Mr.
Essam Khashoggi, who controls EKI and is the beneficial owner of 35.91% of the
Company's Common Stock, agreed for himself and on behalf of EKI, not to sell any
of the Company's shares for an 18 month period ending in August 2004 (excluding
shares issuable to former EKI employees under existing option grants and shares
pledged under an existing security agreement with a third party lender).
During 1998, EKI entered into certain agreements with an equipment
manufacturer providing for the purchase by EKI of certain technology applicable
to starch-based disposable packaging. EKI licenses such technology to the
Company on a royalty-free basis pursuant to the License Agreement. In connection
with this purchase, and pursuant to the terms of a letter agreement with EKI,
the Company agreed to pay the seller of the technology $3.5 million on or about
December 31, 2003. In the fourth quarter of 2003, the Company negotiated a
reduction of the obligation to $1.6 million, which was then paid in the fourth
quarter of 2003. In addition, the Company is required to pay the seller $3.0
million over the five-year period commencing January 1, 2004 if EKI, the Company
or their licensees make active use of the technology and have not purchased, by
December 31, 2003, at least $35.0 million of equipment from the seller. As of
December 31, 2003, the Company and its licensees have neither actively used the
technology nor purchased equipment from the seller. The Company does not plan to
make active use of the technology during the year ending December 31, 2004. EKI
has agree to indemnify the Company to the extent the Company is required to pay
any portion of this $3.0 million obligation solely as a result of EKI's or its
licensees' active use of such patents and related technology (other than use by
the Company or it sublicensees).
10
In July 2002, the Company extended a loan in the amount of $55,000 to Mr.
Vincent Truant, President and Chief Operating Officer. The loan is due upon
demand by the Company.
In 2003, the Company paid Mr. Rast, a Director, a $4,000 consulting fee for
doing a detailed evaluation of its demonstration equipment in Europe.
Compensation Committee Report
The Compensation Committee of the Board of Directors of EarthShell
Corporation is pleased to present its annual report on executive compensation.
This report describes the function of the Compensation Committee, the objectives
of the Company's executive compensation program, the various components of
compensation, and explains the basis upon which 2003 compensation determinations
were made by the Compensation Committee with respect to the executive officers
of the Company, including the Named Executive Officers, with the exception of
Mr. Kumar who was not an officer of the Company.
Compensation Committee Charter
The Compensation Committee is charged with the following responsibilities:
o reviewing and recommending to the Board of Directors the annual base
salary, bonus and other benefits for the senior executive officers of
the Company;
o reviewing and commenting on new executive compensation programs that
the Company proposes to adopt;
o periodically reviewing the results of the Company's executive
compensation and perquisite programs to ensure that they are properly
coordinated to yield payments and benefits that are reasonably related
to executive performance;
o ensuring that a significant portion of executive compensation is
reasonably related to the long-term interests of the stockholders;
o participating in the preparation of certain portions of the Company's
annual proxy statement;
o if necessary, hiring a compensation expert to provide independent
advice on compensation levels; and
o ensuring that the Company undertakes appropriate planning for
management succession and advancement.
Compensation Components
The Company's executive compensation program consists of a mixture of base
salary, cash bonuses and stock options. In determining the mix and total amount
of compensation for each executive officer, the Compensation Committee
subjectively considers each executive's overall value to the Company including
past and expected contributions by the executive to the Company's goals. In
addition, the Compensation Committee strives to balance short-term and long-term
incentive compensation to achieve desired results.
Shortly following the Company's initial public offering in March 1998,
anticipating that it would be hiring several new executives as part of its next
stage of development, the Company commissioned SCA Consulting LLC ("SCA"), a Los
Angeles based executive compensation consulting firm, to update its executive
compensation strategy and total pay structure. As part of its assignment, SCA
developed a study of the compensation practices of newly public, development
stage companies. The Compensation Committee references this study as it
administers each of the three components of its executive compensation program
to ensure that its compensation practices are competitive and that the overall
compensation package appropriately attracts, motivates, rewards, and retains key
employees with outstanding abilities.
11
Base Salary. The Company has historically determined base salary for
its executives based on qualifications, job requirements and competitive market
salaries that such qualifications and job requirements command. As the Company
grows, it will continue to rely on peer group competitive compensation practices
to remain consistent and competitive in its compensation practices.
The Company paid base compensation to Mr. Vincent Truant, President and
Chief Operating Officer, in the amount of $350,000 for his services to the
Company during 2003. Pursuant to an employment agreement effective October 15,
1993, Mr. D. Scott Houston, Chief Financial Officer and Secretary received base
compensation during 2003 of $327,200, reflecting various adjustments since 1993.
In addition, the Company paid a base salary to Dr. Per J. Andersen, Chief
Science Officer in the amount of $287,200 for his services to the Company during
2003. The base salary figures for Mr. Houston and Dr. Andersen reflect a $7,200
car allowance.
Salaries for executives are reviewed by the Compensation Committee on
an annual basis and may be adjusted based upon their assessment of the
individual's contribution to and financial growth of the Company as well as
competitive pay levels. The Compensation Committee made no executive salary
adjustments in 2003. In order to conserve cash until the Company is able to
establish its royalty revenue stream, Mr. Hodson and Mr. Houston agreed to a 40%
and 75% reduction in base salary, respectively, effective April 16, 2004.
Bonus. Bonuses may be granted for a fiscal year after the financial
results for that fiscal year become available. The Compensation Committee meets
to consider annual bonuses for each executive based on individual performance as
well as overall financial results of the Company for the year. There is no plan
requiring that bonuses be paid. However, pursuant to their employment
agreements, certain executive officers may be entitled to receive an annual
bonus, the actual amount of which is determined in the sole discretion of the
Compensation Committee.
The Compensation Committee also may consider bonus compensation in
light of the accomplishment of specific milestones developed by management in
support of the annual strategic plan.
On March 24, 2004, the Compensation Committee met to review and
consider the performance of senior management. In determining whether to grant
management bonuses for 2003, the Compensation Committee considered both
individual performance as well as the Company's overall performance. Although
the Compensation Committee noted several significant individual and Company
achievements during the year, in light of the delays the Company has experienced
in commercializing the Company's technology as well as the financial condition
of the Company, the Compensation Committee determined that no bonuses for 2003
would be granted.
Stock Options. The Compensation Committee believes that significant
equity interests in the Company in the form of stock options held by the
Company's management serve to align the interests of the executive management
team with those of stockholders. The Stock Option Committee may grant stock
options and restricted stock to executives and other key employees of the
Company pursuant to the 1995 Stock Incentive Plan. In September of 2003, the
Stock Option Committee granted to individual members of management fully vested
stock options issued under the 1995 Stock Incentive Plan at the then-current
market price exercisable only upon successful completion of certain milestones
that are critical to the long-term success of the Company. The option grants
were as follows:
Stock Options
-------------
Simon K. Hodson 41,667
Vincent Truant 20,833
D. Scott Houston 20,833
Per J. Andersen 20,833
The stock options granted are reflected in the Stock Options Grant
table.
The Stock Option Committee will continue to consider various methods to
provide additional incentives to management and employees of the Company,
including granting additional stock options and/or restricted stock. In
determining the grants of stock options and restricted stock, the Stock Option
Committee will take into account,
12
among other things, the respective scope of responsibility and the anticipated
performance requirements and contributions to the Company of each proposed award
recipient as well as the amounts of prior grants.
Compensation to Chief Executive Officer in 2003
The Compensation Committee meets annually to evaluate the Chief
Executive Officer's performance and to review the Chief Executive Officer's
compensation. A founder of the Company and co-innovator of the technology, Mr.
Simon K. Hodson has been a driving force in making the Company - as a
corporation and as a new packaging concept - a reality. His concern for the
environment, coupled with his visionary leadership and commitment, has helped
the Company achieve its current state of development.
In reviewing Mr. Simon Hodson's compensation, the Compensation
Committee considers his principal responsibilities, which include providing
overall vision and strategic direction for EarthShell, attracting and retaining
highly qualified employees and developing and maintaining key customer and
capital relationships.
Mr. Hodson received a base compensation of $500,000 during 2003. This
amount was based on the Compensation Committee's assessment that Mr. Hodson is
uniquely qualified to lead the Company through its early development stages to
initial commercialization. The Board determined that his vision for the Company,
both from a technical and business viewpoint, continues to be pivotal in
bringing the Company to the point of commercializing its first product lines.
Based in part on the foregoing, the Compensation Committee concluded that the
$500,000 base salary compensation was appropriate for 2003.
In order to conserve cash until the Company is able to establish its
royalty revenue stream, Mr. Hodson agreed to a 40% reduction in base salary
effective April 16, 2004.
In determining Mr. Hodson's 2003 annual bonus, the Compensation
Committee considered both Mr. Hodson's individual performance as well as that of
the Company overall. Although the Compensation Committee noted several
significant achievements during the year, in light of the delays the Company has
experienced in commercializing the Company's technology as well as the financial
condition of the Company, the Compensation Committee determined that no bonus
for 2003 would be granted.
On September 19, 2003, Mr. Hodson was granted 10-year, fully vested
options to purchase 41,667 shares of Common Stock at the then-current market
value, exercisable only after the completion of certain milestones that are
critical to the long-term success of the Company
Mr. Hodson owns a minority profits interest in EKI, the Company's
majority stockholder.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the deductibility of compensation over $1 million to certain
executive officers unless, in general, the compensation is paid pursuant to a
plan which is performance related, non-discretionary and has been approved by
the Company's stockholders. The Company did not pay any compensation in 2003
that would be subject to Code Section 162(m). The Compensation Committee intends
to establish policies regarding qualification of compensation under Section
162(m) of the Code to the extent it considers such policies appropriate.
Submitted by the Company's Compensation Committee
Mr. Khashoggi
Mrs. Khashoggi
Dr. Roland
13
Stock Performance Graph
The graph below compares the cumulative total return on the Company's
Common Stock for the last five fiscal years to the total cumulative return on
the S&P 500 Index and the Dow Jones Containers & Packaging Industry Group Index
(USA). The comparison assumes $100 was invested in the Company's common stock
and the indexes on December 31, 1998 and assumes reinvestment of dividends
before consideration of income taxes.
The stock performance depicted in the graph below is not necessarily
indicative of future performance. The Stock Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission or subject to Regulations 14A or 14C or to the liabilities
of Section 18 of the Exchange Act, except to the extent that the Company
specifically requests that such information be treated as soliciting material or
specifically incorporates it by reference into a filing under the Securities Act
or Exchange Act.
[REPRESENTATION OF LINE CHART]
Indexed Data
Close EarthShell Index S&P 500 Index Dow Jones CTR Index
12/31/1998 100.0 100.0 100.0
12/31/1999 34.6 119.5 94.4
12/31/2000 10.7 107.4 60.3
12/31/2001 16.8 93.4 74.9
12/31/2002 4.9 71.6 79.8
12/31/2003 1.3 90.5 94.0
14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information with respect to compensation
plans (including individual compensation arrangements) under which equity
securities of the Company are authorized for issuance to employees or
non-employees (such as directors, consultants, advisors, vendors, customers,
suppliers or lenders), as of December 31, 2003:
(a)
Number of (c)
Securities to be Number of Securities
Issued Upon (b) Remaining Available for
Exercise of Weighted-Average Future Issuance Under
Outstanding Exercise Price of Equity Compensation
Options, Outstanding Plans (excluding
Warrants and Options, Warrants securities reflected in
Plan Category Rights and Rights column (a))
--------------------------------- ------------------ ----------------- --------------------------
Equity Compensation Plans 384,912 $38.24 865,088
Approved by Security Holders
Equity Compensation Plans Not __ __ __
Approved by Security Holders
Total 384,912 $38.24 865,088
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth certain information with respect to the
beneficial ownership of each class of the Company's voting securities as of
April 23, 2004, by (i) each person or company known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding shares, (ii) each
director of the Company, (iii) the Chief Executive Officer of the Company and
each of the other executive officers of the Company whose cash compensation
exceeded $100,000 during the fiscal year ended December 31, 2003 (collectively,
the "Named Executive Officers") and (iv) all directors and Named Executive
Officers of the Company as a group.
Percentage of Shares
Number of Shares of of Common Stock
Name and address (1) Common Stock Outstanding
------------------------------------------------ ------------------- --------------------
Essam Khashoggi (2) (3)......................... 5,077,311 35.91%
Simon K. Hodson (4)............................. 3,500 *
John Daoud (5).................................. 35,515 *
Layla Khashoggi (3)............................. 10,415 *
George W. Roland (6)........................... 5,479 *
Hamlin Jennings (7)............................. 2,951 *
Walker Rast..................................... - *
Vincent J. Truant (8)........................... 32,917 *
D. Scott Houston (9)............................ 44,120 *
Per J. Andersen (10)............................ 46,666 *
Directors and Named Executive Officers as a
group......................................... 5,258,874 36.52%
E. Khashoggi Industries, LLC.................... 4,049,899 28.66%
EKINVESCO....................................... 715,436 5.06%
-------------------------
15
* Indicates ownership of less than 1%.
(1) The address of all individuals, entities and stockholder groups listed in
the table is c/o EarthShell Corporation, 6740 Cortona Drive, Santa Barbara,
California 93117.
(2) Includes 4,049,899 shares held by E. Khashoggi Industries, LLC ("EKI"), and
715,436 shares held by EKINVESCO, the controlling owner of each being Mr.
Khashoggi. Includes 218,228 shares held by other entities, including CTC,
in which Mr. Khashoggi also has a controlling ownership interest. Also
includes a fully exercisable warrant to purchase 83,333 shares of Common
Stock issued by the Company. Mr. Khashoggi has sole voting and dispositive
power with respect to all 5,066,896 shares referred to in this note, and is
therefore deemed to be the beneficial owner of such shares.
(3) Includes options to purchase 10,415 shares of Common Stock issued under the
1995 Stock Incentive Plan, which are fully vested and exercisable.
(4) Represents shares held by Hodson Investments, LLC. Does not include any of
the shares held by EKI, or the 71,739 shares held by CTC. Mr. Hodson holds
a minority ownership interest in EKI and CTC.
(5) Includes options to purchase 25,000 shares of Common Stock from EKI which
were issued to Mr. Daoud in his capacity as an officer of EKI, and options
to purchase 10,515 shares of Common Stock issued under the 1995 Stock
Incentive Plan, all of which are fully vested and exercisable.
(6) Includes options to purchase 5,479 shares of Common Stock issued under the
1995 Stock Incentive Plan, which are fully vested and exercisable.
(7) Includes options to purchase 2,951 shares of Common Stock issued under the
1995 Stock Incentive Plan, which are fully vested and exercisable.
(8) Includes options to purchase 28,750 shares of Common Stock issued under the
1995 Stock Incentive Plan, which are fully vested and exercisable.
(9) Includes options to purchase 42,037 shares of Common Stock issued under the
1995 Stock Incentive Plan which are fully vested and exercisable.
(10) Includes options to purchase 8,333 shares of Common Stock issued under the
1995 Stock Incentive Plan, and options to purchase 38,333 shares of Common
Stock issued by EKI, all of which are fully vested and exercisable. As of
December 31, 2003, Dr. Andersen was no longer an employee of the Company.
The information shown is based upon the Company's best knowledge and the
fact that Dr. Andersen has not filed any Schedule 13Ds, 13Gs or Forms 4 or
5 with the Securities and Exchange Commission after the date of his
departure.
ITEM 13. CERTAIN RELATIONSHIPS AND OTHER RELATED TRANSACTIONS
All relationships and related transactions reported in this Annual
Report are described under the caption "Compensation Committee Interlocks and
Insider Participation."
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Audit Committee pre-approved the engagement of Farber & Hass LLP to
provide audit services for the fiscal year ended December 31, 2003, including
the quarterly reviews for the quarters ended June 30, 2003 and September 30,
2003. Farber & Hass LLP provided no other audit services, audit-related
services, tax services or permitted non-audit services for and during the fiscal
year ending 2003, except for the statutory audit of the Company's benefit plan
for the year ended December 31, 2002. The Audit Committee has been in
discussions with respect to the adoption of a pre-approval policy relating to
audit services for the fiscal year ending 2004 and for all audit-related
services, tax services and non-audit services to be performed by Farber & Hass
LLP during the fiscal year ending 2004.
During the fiscal years ended December 31, 2003 and 2002, the following
audit, audit-related, tax and non-audit fees were incurred by the Company:
Audit Fees. For the year ended December 31, 2003, Farber & Hass LLP
charged the Company an aggregate of $59,710 for professional services rendered
for the 2003 audit of the Company's financial statements and the review of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for the quarters ended June 30, 2003 and September 30, 2003. In addition,
Deloitte & Touche, LLP, the Company's prior independent public accountants,
charged the Company an aggregate of approximately $16,800 for professional
16
services rendered in connection with the inclusion of their audit opinions
related to the 2002 and 2001 audits in the Company's December 31, 2003 Form 10-K
and the review of the financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003. For the year ended
December 31, 2002, Deloitte & Touche, LLP charged the Company an aggregate of
$168,050 for professional services rendered for the 2002 audit of the Company's
financial statements and the review of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for the three quarters of 2002.
Audit-Related Fees. During the year ended December 31, 2003, the
Company incurred fees of $28,750 for assurance and related services related to
Deloitte & Touche, LLP's review of the Company's financial statements included
in various SEC documents that are not included in Audit Fees, and Farber & Hass
charged the Company $6,500 for benefit plan statutory audits. During the year
ended December 31, 2002, the Company incurred fees of $3,500 for assurance and
related services related to Deloitte & Touche, LLP's review of the Company's
financial statements included in various SEC documents that are not included in
Audit Fees.
Tax Fees. During the year ended December 31, 2003, the Company incurred
fees of $16,243 for tax return preparation. During the year ended December 31,
2002, the Company incurred fees of $12,000 for tax preparation.
Non-Audit Fees. During the year ended December 31, 2003, the Company
engaged Deloitte & Touche, LLP to analyze the performance of the manufacturing
equipment in Germany at a fee of $16,487. During the year ended December 31,
2002, the Company engaged Deloitte & Touche, LLP to consult on franchise tax
reporting at a fee of $540.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its
report to be signed on its behalf by the undersigned, thereunto duly authorized.
EARTHSHELL CORPORATION
By: /s/ Simon K. Hodson
-------------------
Name: Simon K. Hodson
Title: Vice Chairman of the Board and
Chief Executive Officer
Date: June 8, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
---------------------------------------------------------------------------------------------------------------
/s/ Essam Khashoggi Chairman of the Board June 8, 2004
-------------------
Essam Khashoggi
/s/ Simon K. Hodson Vice Chairman of the Board and June 8, 2004
------------------- Chief Executive Officer
Simon K. Hodson (Principal Executive Officer)
/s/ D. Scott Houston Chief Financial Officer and Secretary June 8, 2004
-------------------- (Principal Financial Officer)
D. Scott Houston
/s/ Michael P. Hawks Controller June 8, 2004
-------------------- (Principal Accounting Officer)
Michael P. Hawks
/s/ John Daoud Director June 8, 2004
--------------
John Daoud
/s/ Layla Khashoggi Director June 8, 2004
-------------------
Layla Khashoggi
/s/ Hamlin Jennings Director June 8, 2004
-------------------
Hamlin Jennings
/s/ Walker Rast Director June 8, 2004
---------------
Walker Rast
/s/ George Roland Director June 8, 2004
-----------------
George Roland
18
Exhibit Index
-------------
Exhibit No.
3.1 Certificate of Incorporation of the Company.(1)
3.2 Bylaws of the Company.(1)
3.3 Certificate of Designation, Preferences Relative, Participating,
Optional and Other Special Rights of the Company's Series A Cumulative
Senior Convertible Preferred Stock.(1)
3.4 Amended and Restated Certificate of Incorporation of the Company.(1)
3.5 Amended and Restated Bylaws of the Company.(1)
4.1 Specimen certificate of Common Stock.(1)
4.3 Form of Warrant to purchase Common Stock dated August 12, 2002.(9)
4.4 Form of Note under Loan Agreement dated as of September 9, 2002 between
the Company and E. Khashoggi Industries, LLC.(11)
4.5 Form of Secured Convertible Debenture due March 5, 2006.(13)
4.6 Intellectual Property Security Agreement dated as of March 5, 2003
among the Company, E. Khashoggi Industries, LLC and the investors
signatory thereto.(13)
4.7 Waiver and Amendment to Debentures and Warrants dated as of March 5,
2003 among the Company and the purchasers identified on the signature
pages thereto.(13)
4.8 Exchange Agreement dated as of March 5, 2003 between the Company and
the institutional investor signatory thereto.(13)
10.1 Amended and Restated License Agreement dated February 28, 1995 by and
between the Company and E. Khashoggi Industries("EKI").(2)
10.2 Registration Rights Agreement dated as of February 28, 1995 by
and between the Company and EKI, as amended.(1)
10.3 EarthShell Container Corporation 1994 Stock Option Plan.(1)
10.4 EarthShell Container Corporation 1995 Stock Incentive Plan.(1)
10.5 Form of Stock Option Agreement under the EarthShell Container
Corporation 1994 Stock Option Plan.(1)
10.6 Form of Stock Option Agreement under the EarthShell Container
Corporation 1995 Stock Incentive Plan.(1)
10.7 Warrant to Purchase Stock issued July 2, 1996 by the Company to
Imperial Bank.(1)
10.8 Amended and Restated Technical Services and Sublease Agreement dated
October 1, 1997 by and between the Company and EKI.(1)
10.9 Amended and Restated Agreement for Allocation of Patent Costs dated
October 1, 1997 by and between the Company and EKI.(1)
10.10 Warrant to Purchase Stock issued October 6, 1997 by the Company to
Imperial Bank.(1)
19
10.11 Warrant to Purchase Stock dated December 31, 1997 by the Company to
Imperial Bank.(1)
10.12 Letter Agreement re Haas/BIOPAC Technology dated February 17, 1998 by
and between the Company and EKI.(1)
10.13 Second Amendment to 1995 Stock Incentive Plan of the Company.(1)
10.14 Amendment No. 2 to Registration Rights Agreement dated as of September
16, 1993.(1)
10.15 Amendment No. 2 to Registration Rights Agreement dated February 28,
1995.(1)
10.16 Employment Agreement dated April 15, 1998 by and between the Company
and Vincent J. Truant.(3)
10.17 First Amendment dated June 2, 1998 to the Amended and Restated License
Agreement by and between the Company and E. Khashoggi
Industries("EKI").(4)
10.18 First Amendment to 1995 Stock Incentive Plan of the Company.(5)
10.19 Third Amendment to 1995 Stock Incentive Plan of the Company.(6)
10.20 Fourth Third Amendment to 1995 Stock Incentive Plan of the Company.(6)
10.21 Lease Agreement dated August 23, 2000 by and between the Company and
Heaver Properties, LLC.(7)
10.22 Settlement Agreement with Novamont dated August 3, 2001.(8)
10.23 Amendment to Common Stock Purchase Agreement dated March 28, 2001.(8)
10.24 Securities Purchase Agreement dated as of August 12, 2002 between the
Company and the investors signatory thereto.(9)
10.25 Amendment #1 to Employment Agreement dated as of May 15, 2002 by and
between the Company and Vince Truant.(10)
10.26 Loan Agreement dated as of September 9, 2002 between the Company and E.
Khashoggi Industries, LLC.(11)
10.27 Second Amendment dated 29 July, 2002 to Amended and Restated License
Agreement between E. Khashoggi Industries, LLC and the Company.(12)
10.28 License and Information Transfer Agreement dated 29 July, 2002 between
the Biotec Group and the Company.(12)
10.29 Loan and Securities Purchase Agreement dated as of March 5, 2003
between the Company and the investors signatory thereto.(13)
10.30 Sublicense Agreement dated February 20, 2004 by and between the Company
and Hood Packaging Corporation.(14)
10.31 Operating and Sublicense Agreement dated October 3, 2002 by and between
the Company and Sweetheart Cup Company, Inc.(14)
10.32 First Amendment to Operating and Sublicense Agreement dated July 2003
by and between the Company and Sweetheart Cup Company, Inc.(14)
20
10.33 Lease Agreement dated July 2003 between the Company and Sweetheart Cup
Company, Inc.(14)
10.34 First Amendment to Lease Agreement dated December 16, 2003 between the
Company and Sweetheart Cup Company, Inc.(14)
14.4 EarthShell Corporation Code of Ethics for Directors, Officers and
Employees.(14)
16.1 Letter from Deloitte & Touche LLP to the Securities and Exchange
Commission dated July 9, 2003, regarding change in certifying
accountant. (18)
23.1 Independent Auditor's consent.(14)
23.2 Independent Auditor's consent.(14)
31.1 Certification of the CEO pursuant to Rules 13a-14 and 15d-14 under the
Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of the CFO pursuant to Rules 13a-14 and 15d-14 under the
Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
-------------
(1) Previously filed, as an exhibit to the Company's Registration Statement on
Form S-1 and amendments hereto, File no. 333-13287, and incorporated herein
by reference.
(2) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q, for the quarter ended March 31, 1998, and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q, for the quarter ended June 30, 1998, and incorporated herein by
reference.
(4) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q, for the quarter ended September 30, 1998, and incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's annual report on Form 10-K,
for the fiscal year ended December 31, 1998, and incorporated herein by
reference.
(6) Previously filed as part of the Company's definitive proxy statement on
Schedule 14A, file no. 000-23567, for its 1999 annual meeting of
stockholders, and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's annual report on Form 10-K,
for the fiscal year ended December 31, 2000, and incorporated herein by
reference.
(8) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q, for the quarter ended June 30, 2001, and incorporated herein.
(9) Previously filed as an exhibit to the Company's current report on Form 8-K
dated August 12, 2002, and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ended June 30, 2002, and incorporated herein by
reference.
(11) Previously filed as an exhibit to the Company's current report on Form 8-K
dated September 17, 2002, and incorporated herein by reference.
21
(12) Previously filed as an exhibit to the Company's quarterly report on Form
10-Q for the quarter ended September 30, 2002, and incorporated herein by
reference.
(13) Previously filed as an exhibit to the Company's current report on Form 8-K
dated March 5, 2003, and incorporated herein by reference.
(14) Previously filed as an exhibit to the Company's annual report on Form 10-K,
for the fiscal year ended December 31, 2003, and incorporated herein by
reference.
22